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Neuroscientists Know How Much You’re Willing to Pay for Something
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A project developed by a group of three HSE psychology students received the award for best biotech project at the Entrepreneurial Breakthrough of the Year competition held by the Skolkovo Moscow Business School. A grant to study at Skolkovo was awarded to Andrei Kislov, Egor Levchenko, and Egor Selivanov for their work on neuromarketing technology that determines the subjective cost of a good based on electroencephalographs.
‘Did you ever have the feeling that you were looking at a good that couldn’t possibly cost what was written on the price tag? Most likely, the answer is yes. This subjective sense of “disagreement” alerts you that something’s not right here. It is a signal that tells you when a price is too high or too low,’ notes Andrei Kislov, who was the mastermind behind a project that studies the subjective cost of a good based on electroencephalographs. ‘I’ve been interested in neurobiology for quite some time, particularly the idea of a person’s agreement or disagreement with what’s happening around them. This is true for all aspects of live, including practical areas like a person’s subjective agreement with the cost of a good. Modern day science allows us to study these subjective assessments with the help of neuromarketing technology, which is often used to analyse consumer behaviour,’ Kislov adds.
With the support of the Head of the HSE School of Psychology Vasily Klucharev, the Director of the Centre for Cognition & Decision Making Anna Shestakova, the founder of the first commercial neuromarketing laboratory in Russia Natalia Galkina, and a number of other experts in the field of neuroscience, the students began their lab research in the fall of 2015. They were able to make their first conclusions at the end of last year, and they presented their results at the Entrepreneurial Breakthrough of the Year competition.
All team members are in the same Psychology programme. Egor Levchenko, who is able to turn neurobiological ideas into mathematical models, and Andrei Kislov are both third-year students, while Egor Selivanov, who is a business strategist working on advancing the project, is in his second year.
The three tested out the hypothesis that an electroencephalograph can identify if a price is perceived as too high or too low. Fellow HSE psychology students served as the test subjects. They were asked to evaluate the cost of non-alcoholic beverages (juice, soda, etc.), and their hypothesis was confirmed – you really can see indicators as to what price certain groups of consumers consider too low, too high, or just right.
‘We don’t give price recommendations. We are just providing information on how much a certain part of the target audience considers a good to be worth. Whether or not retailers should charge a different price – that’s a different conversation altogether. Pricing is a complicated field that, of course, concerns more than just how much people think something’s worth. In the end, a realistic understanding of the value of one’s product is the most important information any business can have,’ Andrei comments.
He adds that pilot research is currently coming to an end, and after winning the Entrepreneurial Breakthrough of the Year competition, the team has already received offers from several companies that would like to have their prices tested using this technology in order to assess the work of their branding teams and marketing specialists.