One of the most effective methods for changing our behaviour is to alter the level of friction we face when making a decision. If we want to encourage an action, make it simple. If we want to restrict it, put up obstacles. We use this method intuitively in our everyday life – when we are trying to eat healthily we know it’s best not to have chocolate readily accessible in the fridge – but we tend to understate how the introduction of small amounts of friction can have profound consequences for the choices we make.
Take the case of paracetamol. It is estimated that after the UK introduced limits on the number of tablets contained in a single packet, overdose deaths fell by 43%[i]*. It seems absurd to believe that the implementation of a seemingly slight change could materially influence a decision of unparalleled consequence, but it can. When behaviours are driven by emotion and moments, even minor amounts of friction can exhibit incredible leverage. This is a concept that matters a great deal for investors.
More here – Behavioural Investment