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 Mondays, 3:00-5:00 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 29 from 1:00PM-4:00PM)

       35%

Group project (December 2, 7 or 9)

       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 Isabella Pan Sanjana Khanna Alexander Mccurley Kaitlyn Oliver Yingying Ping Aasim Siddiqui
Group 2 Trevor Messenger Sukhman Sunner Gabriel Iannetti Rui Xi Qiu Cali Martin Stephanie Li
Group 3 Michela Ye Nick Yan Debbie Wang Lindsay Lam Nate Samuel Arjun Singh
Group 4 Julia Gotovsky Jerry Wu Nora Welsby Daniel Yuan Shakran Gazi Paige Radin
Group 5 Emily Cao Will Houslander Julia Colangelo Neik Patel Luca Roma Sierra Knapton
Group 6 Antonia Travnicek Leon Mu Jessica Chen Claire Kuo Alex Baldwin Carson Berall
Group 7 Sofia Tischler Molly Jin Himanshu Jethani Aaron Katz Ben Symons Joseph Birdsell-Farrow
Group 8 Melissa Huang Sophia Emer Sylvia Liu Leah DeFrancesco Lea Jantosovicova Ethan Won
Group 9 Kiarash Lotfalizadeh Sam Sayari Dorie Dwosh Lily Gulerce Kelly Lee Shiven Sharma
Group 10 Anika Skrzypek Esther Fu Sebastian Opoka Curtis Li Meryl Tu Katy Wong
Group 11 Cristian Casiero Silvia Xie Alex Sangara Olivia Capirchio Spencer Colebeck
Group 12 Bobby Dowhan Duaa Ali Elaine Chen Ishaan Sharma Denis Granulo

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.