Behavioural
Economics

Session 1

Joshua
Foster



Agenda

  1. Introduction to the Course.
  2. Introduction to Behavioural Economics.
  3. Case: Behavioural Insights Team (A).

About Me

Joshua Foster, Ph.D.

  • Feel free to call me Josh.
  • I do research on Psychology and Economics.
  • Specialize in firm competition.

I am always happy to help!

  • Email me at jfoster@ivey.ca.
  • Office Hours are Thursdays, 2:00-3:00 PM.
  • Also available by appointment.

Course Objectives

  1. Find opportunities to include behavioural economic decision making at each decision node within an organization.
  2. Develop an essential library of biases.
  3. Practice environmental design problems.

Course Themes

  1. Psychology in markets.
  2. Subjective evaluations of various tradeoffs.
  3. Detriments of biases in judgment.
  4. Much, much more.
  5. Consideration given to business, consumers, non-profits, public policy.

Course Implementation

  1. Everything you need will be on Learn.
  2. Interactive resources will be provided by MobLab.
    (More info on that later.)

Evaluations & Assessments

Class contribution

30%

Midterm examination (October 21 from 8:00-11:00)

       35%

Group project (December 3 or December 5)

       35%

 

100%

Questions?

Case: An exercise in choice architecture.

Let's jump right into it.

  • We'll break out into small groups.
  • Take 10 minutes to design your own tax letter in Miro.
  • When times up, we'll share as a class.
Group 1
Timothy Haluk
Sam Lu
Theo Kalff
Joyce Liu
Hailey Tang
Lauren Um
Group 2
Audrey Ghilain
Junaid Rana
Joey Lisser
Wenqi Shen
Kate McCallum
Jennifer Bitton
Group 3
Emily Kim
Sue Han
Kayla Whitnell
Saniya Niyoosha
Emily Qin
Shane Gitlin
Group 4
Gavin Barclay
Mara Lerf
Tristan Gilchrist
Kayla DeAngelis
Patrick Westdal
Declan O'Neill
Group 5
Amandine Prioux
Chloe Bissell
Johann Zhao
Yiling Yang
Noah Roddis
Tanner Spadafora
Group 6
Palina Radzioshkina
Gauri Pasbola
Max Leibovich
Katie Werner
Orianna Lui
Jane Wang
Group 7
Juvhan Krisnapillai
Ryan Smith
Lena Tang Qiu
David Kang
Siqi Man
Tej Sharma
Group 8
Jamie White
Nunu Mequanint
Anthony Pham
Isabel Yuan
Makenzie Shirley
David Hascal

Small Group Task

Take the next ten minutes and construct your own version of the tax letter with the members of your group.

Summary of Ideas

Who here thinks the letter should:

  • Focus on social norms?
  • On threat of repossession?
  • On something else?
  • How should we decide?

Experimentation

Randomization:

Random assignment of subjects ensures that there are no inherent differences between the groups answering the different questions. The differences in behaviour can be attributed solely to the different questions.

Experimental Manipulation:

To learn what difference something makes in people's behaviour, we vary that one thing between subjects.

Results.

Social norms helped. There was 5% increase in the likelihood delinquent taxpayers submitted a payment in the weeks following their letter -- the difference of millions of pounds in revenue each year.

Key takeaways.

  1. Choice architecture is an important component of many decision-making environments.
  2. Small and seemingly irrelevant features can improve business and social outcomes.
  3. Behavioural economics is uniquely suited to exploring the psychology of tradeoffs and identifying optimal environmental designs.