Project overview.

• Objective: use behavioural economics to improve the outcomes within a community according to its own preferences.
• Presentation: a 10-15 minute overview of the proposal to take place during the last week of class.
• Report: a slide deck that provides detail including and extending what was shared in the presentation. It is due the day the team's presentation is scheduled.

Recommendation for presentation structure:

• Identify a social or business problem.
• Demonstrate how a behavioural theory can explain this problem.
• Provide a solution that could feasibly fix the problem.
• Describe the expected improvements that result from the policy being implemented.

Choice architecture problem: retirement savings.

• "70% [of Canadians] are worried that they are not saving enough."
• Almost no one thinks they are saving too much.

How can choice architecture guide the under-savers without disturbing those who are already on track?

Instructions:

1. Categorize a list of behavioural concepts according to their relative presence and effect on savings decisions.
2. Document specifically how the three most relevant behavioural concepts influence decision-making.
3. Using your insights above, design an environment in which a community of people will make savings decisions.
4. Select a team member to report back to the class.

Team Task

Thaler's Save More Tomorrow (SMarT) Plan

1. Found a company wanting to improve employee savings.
2. Thaler worked with those empolyees who refused traditional financial advisement.
3. "Would you like to save more with your next raise?"
• Amount was less than their raise.
• Continued with each raise.

Ultimately saved more than those with financial advisor.

Why did this plan work?

1. Present bias: it sidesteps short-run impatience.
2. Loss aversion: it didn't require a decrease in consumption.
3. Default effect: a small cost to switching kept employees saving.