Preview only show first 10 pages with watermark. For full document please download

Robert-cialdini-influence-science-and-practice (1)

Influência de acordo com a ciência e na prática

   EMBED


Share

Transcript

  ,QIOXHQFH 6FLHQFHDQG3UDFWLFH )RXUWK(GLWLRQ 5REHUW%&LDOGLQL $UL]RQD6WDWH8QLYHUVLW\ $OO\QDQG%DFRQ %RVWRQ‡/RQGRQ‡7RURQWR‡6\GQH\‡7RN\R‡6LQJDSRUH 6FDQQHU%RRN3LUDWH=HURGD]HDUUUUUUU 6HULHV(GLWRU&DURO\Q0HUULOO 'HYHORSPHQWDO(GLWRU-RGL'HYLQH (GLWRULDO$VVLVWDQW/DUD0=HLVHV 3URGXFWLRQ(GLWRU-RH6ZHHQH\ (GLWRULDO3URGXFWLRQ6HUYLFH2PHJDW\SH7\SRJUDSK\,QF &RPSRVLWLRQDQG3UHSUHVV%X\HU/LQGD&R[ 0DQXIDFWXULQJ%X\HU0HJDQ&RFKUDQ &RYHU$GPLQLVWUDWRU/LQGD.QRZOHV (OHFWURQLF&RPSRVLWLRQ2PHJDW\SH7\SRJUDSK\,QF 3KRWR5HVHDUFK6XH&+RZDUG  &RS\ULJKW‹E\$OO\Q %DFRQ$3HDUVRQ(GXFDWLRQ&RPSDQ\*RXOG6WUHHW1HHGKDP+HLJKWV0$ ,QWHUQHWZZZDEDFRQFRP $OOULJKWVUHVHUYHG1RSDUWRIWKHPDWHULDOSURWHFWHGE\WKLVFRS\ULJKWQRWLFHPD\EHUHSURGXFHGRUXWLOL]HGLQDQ\IRUPRUE\DQ\PHDQVHOHFWURQLFRU PHFKDQLFDOLQFOXGLQJSKRWRFRS\LQJUHFRUGLQJRUE\DQ\LQIRUPDWLRQVWRUDJHDQGUHWULHYDOV\VWHPZLWKRXWZULWWHQSHUPLVVLRQIURPWKHFRS\ULJKWRZQHU /LEUDU\RI&RQJUHVV&DWDORJLQJLQ3XEOLFDWLRQ'DWD &LDOGLQL5REHUW% ,QIOXHQFHVFLHQFHDQGSUDFWLFH5REHUW%&LDOGLQL²WKHG SFP ,QFOXGHVELEOLRJUDSKLFDOUHIHUHQFHVDQGLQGH[,6%1 DONSDSHU ,QIOXHQFH 3V\FKRORJ\ 3HUVXDVLRQ 3V\FKRORJ\ &RPSOLDQFH, 7LWOH %)&  ²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²OLNLQJIRUWKHUHTXHVWHU²WKDWQRUPDOO\DIIHFWVWKHGHFLVLRQWRFRPSO\ 7KLQNRIWKHLPSOLFDWLRQV3HRSOHZHPLJKWRUGLQDULO\GLVOLNH²XQVDYRU\RUXQZHOFRPHVDOHVRSHUDWRUV GLVDJUHHDEOHDFTXDLQWDQFHVUHSUHVHQWDWLYHVRIVWUDQJHRUXQSRSXODURUJDQL]DWLRQV²FDQJUHDWO\LQFUHDVHWKH FKDQFHWKDWZHZLOOGRZKDWWKH\ZLVKPHUHO\E\SURYLGLQJXVZLWKDVPDOOIDYRUSULRUWRWKHLUUHTXHVWV/HW V WDNHDUHFHQWKLVWRULFDOH[DPSOH7KH+DUH.ULVKQD6RFLHW\LVDQ(DVWHUQUHOLJLRXVVHFWZLWKFHQWXULHVROGURRWV WUDFHDEOHWRWKH,QGLDQFLW\RI&DOFXWWD,WVVSHFWDFXODUPRGHUQGD\VWRU\RFFXUUHGLQWKHVZKHQLW H[SHULHQFHGDUHPDUNDEOHJURZWKQRWRQO\LQIROORZHUVEXWDOVRLQZHDOWKDQGSURSHUW\7KHHFRQRPLFJURZWK ZDVIXQGHGWKURXJKDYDULHW\RIDFWLYLWLHVWKHSULQFLSDODQGPRVWYLVLEOHRIZKLFKZDVVRFLHW\PHPEHUV  UHTXHVWVIRUGRQDWLRQVIURPSDVVHUVE\LQSXEOLFSODFHV'XULQJWKHHDUO\KLVWRU\RIWKHJURXSLQWKLVFRXQWU\ WKHVROLFLWDWLRQIRUFRQWULEXWLRQVZDVDWWHPSWHGLQDIDVKLRQPHPRUDEOHIRUDQ\RQHZKRVDZLW*URXSVRI .ULVKQDGHYRWHHV²RIWHQZLWKVKDYHGKHDGVDQGZHDULQJLOOILWWLQJUREHVOHJZUDSSLQJVEHDGVDQGEHOOV²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²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²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²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‡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‡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²SDUNLQJUHJXODWLRQVDQGWKHOLNH%XWWRLQGXOJH WKHPLQWKLVFRQFHLWZKHQLWFRPHVWRWKHUXOHRIUHFLSURFLW\LVQRWRQO\ODXJKDEOHLW VGDQJHURXV 7KH1RW6R)UHH6DPSOH 2IFRXUVHWKHSRZHURIUHFLSURFLW\FDQEHIRXQGLQWKHPHUFKDQGLVLQJILHOGDVZHOO$OWKRXJKWKHQXPEHURI H[DPSOHVLVODUJHOHW VH[DPLQHDSDLURIIDPLOLDURQHV$VDPDUNHWLQJWHFKQLTXHWKHIUHHVDPSOHKDVDORQJ DQGHIIHFWLYHKLVWRU\,QPRVWLQVWDQFHVDVPDOODPRXQWRIWKHUHOHYDQWSURGXFWLVJLYHQWRSRWHQWLDOFXVWRPHUV WRVHHLIWKH\OLNHLW&HUWDLQO\WKLVLVDOHJLWLPDWHGHVLUHRIWKHPDQXIDFWXUHU²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²ERWWOHVRIIXUQLWXUHSROLVKGHWHUJHQW RUVKDPSRRVSUD\FRQWDLQHUVRIGHRGRUL]HUVLQVHFWNLOOHUVRUZLQGRZFOHDQHUV²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²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²KDSSLO\VREXWQRQHWKHOHVVEHZLOGHUHG²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²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²DEXVLQHVVPDQ²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²E\JLYLQJZLWKRXWDOORZLQJWKHUHFLSLHQWDQRSSRUWXQLW\WRUHSD\²DUHDOVRGLVOLNHGIRULW7KLVUHVXOWZDVIRXQG WRKROGIRUHDFKRIWKHWKUHHQDWLRQDOLWLHVLQYHVWLJDWHG²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²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²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²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²DVORQJDV LWZDVVPDOOHUWKDQWKHILUVWUHTXHVW²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²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²DIHZFLJDUHWWHVRUDELWRIIUXLW²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²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²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²RQHWKHLUWHDPKDGZRQ0\ IHOORZUHVHDUFKHU$YULO7KRUQHDQG,VLPSO\OLVWHQHGWRZKDWZDVVDLGDQGUHFRUGHGWKHSHUFHQWDJHRIVWXGHQWVZKR XVHGWKHZRUGZHLQWKHLUGHVFULSWLRQV:KHQWKHUHVXOWVZHUHWDEXODWHGLWZDVREYLRXVWKDWWKHVWXGHQWVKDGWULHGWR FRQQHFWWKHPVHOYHVWRVXFFHVVE\XVLQJWKHSURQRXQZHWRGHVFULEHWKHLUVFKRROWHDPYLFWRU\²:HEHDW+RXVWRQ WRRU:HZRQ,QWKHFDVHRIWKHORVWJDPHKRZHYHUZHZDVUDUHO\XVHG,QVWHDGWKHVWXGHQWVXVHGWHUPV GHVLJQHGWRNHHSWKHPVHOYHVVHSDUDWHIURPWKHLUGHIHDWHGWHDP²7KH\ORVWWR0LVVRXULWRRU,GRQ WNQRZ WKHVFRUHEXW$UL]RQD6WDWHJRWEHDW3HUKDSVWKHWZLQGHVLUHVWRFRQQHFWRXUVHOYHVWRZLQQHUVDQGWRGLVWDQFH RXUVHOYHVIURPORVHUVZHUHFRPELQHGFRQVXPPDWHO\LQWKHUHPDUNVRIRQHSDUWLFXODUVWXGHQW$IWHUGU\O\UHFRXQWLQJ WKHVFRUHRIWKHKRPHWHDPGHIHDW²$UL]RQD6WDWHORVWLWWR²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²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²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²D\RXQJPDQ²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²OLNH%LOO*DWHVFKDLUPDQRI0LFURVRIW²DJUHHZLWK0DFUDHDVVHUWLQJWKDWZHDUH FUHDWLQJDQDUUD\RIGHYLFHVFDSDEOHRIGHOLYHULQJDXQLYHUVHRILQIRUPDWLRQWRDQ\RQHDQ\ZKHUHDQ\WLPH 'DYLGVRQ %XWQRWLFHVRPHWKLQJWHOOLQJ2XUPRGHUQHUDRIWHQWHUPHG7KH,QIRUPDWLRQ$JHKDVQHYHU EHHQFDOOHG7KH.QRZOHGJH$JH,QIRUPDWLRQGRHVQRWWUDQVODWHGLUHFWO\LQWRNQRZOHGJH,WPXVWILUVWEH SURFHVVHG²DFFHVVHGDEVRUEHGFRPSUHKHQGHGLQWHJUDWHGDQGUHWDLQHG &KDSWHU 6+257&8766+$//%(6$&5(' %HFDXVHWHFKQRORJ\FDQHYROYHPXFKIDVWHUWKDQZHFDQRXUQDWXUDOFDSDFLW\WRSURFHVVLQIRUPDWLRQLVOLNHO\WREH LQFUHDVLQJO\LQDGHTXDWHWRKDQGOHWKHDEXQGDQFHRIFKDQJHFKRLFHDQGWKHFKDOOHQJHWKDWLVFKDUDFWHULVWLFRIPRGHUQ OLIH0RUHDQGPRUHIUHTXHQWO\ZHZLOOILQGRXUVHOYHVLQWKHSRVLWLRQRIORZHUDQLPDOV²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‡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²DVKRUWFXWDSSURDFKLQ ZKLFKWKHGHFLVLRQWRFRPSO\ RUDJUHHRUEHOLHYHRUEX\ LVPDGHRQWKHEDVLVRIDVLQJOHXVXDOO\UHOLDEOHSLHFH RILQIRUPDWLRQ7KHPRVWUHOLDEOHDQGWKHUHIRUHPRVWSRSXODUVXFKVLQJOHWULJJHUVIRUFRPSOLDQFHDUHWKRVH GHVFULEHGWKURXJKRXWWKLVERRN7KH\DUHFRPPLWPHQWVRSSRUWXQLWLHVIRUUHFLSURFDWLRQWKHFRPSOLDQWEHKDYLRU RIVLPLODURWKHUVIHHOLQJVRIOLNLQJRUIULHQGVKLSDXWKRULW\GLUHFWLYHVDQGVFDUFLW\LQIRUPDWLRQ ‡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