Behavioral Finance for Software Developers and App Publishers

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The Old Schoolhouse

I recently had my 10 year business school reunion. Being the business nerds we are, we had additional classes. Here are some thoughts from one of those:

Behavior Finance by Professor Malcolm Baker

From the session summary:
“At the foundation of finance theory is the idea that investors and managers act rationally… behavioral finance proposes a broader role for social, cognitive, and emotional biases”

Think of it as a bridge between psychology and economics. Economists, basically, work to find the underlying models that best describe how we make decisions in our lives. They don’t believe that we actually do complex math when deciding whether to buy the Tall vs. Grande, but they say, that on average, we all behave as if we were actually doing the the math. Do you wake up and think about your “Expected Utility”? You act like it. Psychologists focus more upon the times when individual act against their best interests. In other words, when their emotions or biases make them behave against the economists model. The press likes to point out the gap between the economists and psychologists, but it isn’t as wide as they paint.

One Hour Crash Course on Behavior Finance

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Making money on the iPhone App Store

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If you haven’t read it yet, Pinchmedia recently release a good report/slideshow on the market dynamics of selling products on Apple’s app store.

You can see it here:
Title: “iPhone AppStore Secrets – Pinch Media”
Link: http://www.slideshare.net/pinchmedia/iphone-appstore-secrets-pinch-media

I have about 10 published mobile apps at this point, and although I think the Pinchmedia presentation is great, and validating, I still think that they see the world through a certain prism that filters much of reality.
From my own experience, I had created my deck on lessons and experiments of publishing on the app store. I’ve identified about, oh, twenty experiments that i’ve performed, with more to come, and put them into this short slidesow. Since it contains a lot of confidential information, I’m saving it for in-person meetings, so contact me if you’re in the Boston area.

So here are two charts from my deck:
An with pretty decent staying power.
screenshot_04.png

An app with less staying power.

screenshot_05.png

I’ve put about 10x the energy into the second app. The interesting question is, or maybe the next question is, “What make the linear decay app” vs. “What makes the exponential decay” app? I think I know the answer. I think other people know the answer, too. I think that the answer knowers aren’t talking.

Now, knowing the answer, and monetizing the answer, are, of course, two differing things….