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, 3:00-4:30 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 22 from 2:00PM-5:00PM)

       35%

Group project (December 2 or December 4)

       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
Armaan Sandhu
Peyton Kou
Newt Chen
Liam Geddes
Mathis Zanzucchi
Madie Erauw
Group 2
Andrew Feng
Jack McDonnell
Emma Jewell
Andrew Yang
Junsoo Pak
Ricky Chiu
Group 3
Nienke Toonen
Cheuk Yee Chen
Aya Aherdan
Johann Abraham
MK Dao
Miriam Youssef
Group 4
Sadiyah Sajjad
Kyle Kim
Ryan Mitchener
Laura Amelie Cordeddu
Caitlin Trinh
Gabriel Sinha
Group 5
Emily Tao
Aidan Zia
Peter Guo
Grace Cousineau
Jackie Yuan
Jessica Luo
Group 6
Cole Smith
Uttej Mannava
Nathan Mark
Oren Joffe
Andrew Korne
Michael Wei
Group 7
Carrie Malkin
Mallery Fischer
Elaine Lin
Otis Ding
Ben Goring
Sarah Smith
Group 8
Abhi Ravipati
Amelie Pirotte
Rongrui Mao
Tessa Fois
Clemence Valet
Elliott Wardle
Group 1
Hooman Mohammadi
Adam Ramkissoon
Alessandro Panetta
Fiona Fan
Carol Xu
Oliver He
Group 2
Evan Scrivener
Kieran Amoroso
Jackson Su
Sarinah Goolam
Francesco Rende
Sudipta Sarkar
Group 3
Ethan Gilhula
Zi Li
Harvey Zhu
Braeden Stewart
Jasmine Gu
Florence Rouvez
Group 4
Sarah Shao
Sanaa El Fatihi
Gabe Evans
Michael Thien
Jackey Lai
Cole Purdell-Lewis
Group 5
Joseph Spadafina
Emmett Koles
Keegan Smith
Hanisha Dhoofar
Andy Hwang
Isabella Valdez
Group 6
Nicholas Giangregorio
Connie Xu
Travis MacKay
Joanne Shao
Xin Zeng
Maurice Ma
Group 7
Hannah Jeon
Laith Amad
Stefano Ruggieri
Jack Hogan
Vanessa Chen
Ryan Pin Harry
Group 8
Steven Grano
Simon Hungate
Andrew Ko
Yusuf Nissar
Emma Bradacs

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.