The situations we find ourselves in determine our behaviour far more than we realise. To show the relevance of this idea to fellow economists, this column presents a natural field experiment that was conducted in an Economics department. The experiment looks at the department members’ honesty in keeping tally of their soda can consumption in the pantry. The honesty rate is shown to depend greatly on the presence of a pen hanging down from the door of the refrigerator, indicating that situational factors are more significant determinants of behaviour than previously realised.
Ben Vollaard, 16 June 2016
Peter Andrews, Amelia Fletcher, Michael Grubb, Charlotte Duke, David Laibson, 15 June 2016
Behavioural industrial organisation centres on competition analysis with realistic assumptions, reflecting human behaviour. In this video, economists Peter Andrews, Amelia Fletcher, Michael Grubb, Charlotte Duke and David Laibson discuss how behavioural industrial organisation can be used to model and regulate financial markets, as well as to promote more effective competition. The video was recorded during the FCA symposium on Behavioural Industrial Organisation held in December 2015.
Stefano DellaVigna, Devin Pope, 29 May 2016
Behavioural economics has made many gains in recent years, but much uncertainty persists about the effectiveness of different behavioural interventions. This column uses data from a large-scale experiment to find the relative effectiveness of multiple treatments within one setting, and to gauge the accuracy of academic experts’ forecasts of responses. It finds monetary incentives are strong motivators, non-monetary psychological inducements are moderately effective, and results using behavioural factors are generally consistent with models of social and time preferences. Further, the interviewed experts correctly anticipate several results, including the effectiveness of psychological inducements, but fail to predict other important features.
Christian Schubert, 22 January 2016
Nudges are modifications of people’s choice architecture that impact their behaviour but don’t change their incentives or coerce them. As a policy instrument, nudges have been shown to be effective in changing certain kinds of behaviours. This column explores the ethical issues that arise in employing such potentially manipulative policies. An evaluation programme is outlined that explores a potential policy’s impact on people’s wellbeing, autonomy, and integrity, along with its practical implications.
Francesco D'Acunto, 20 September 2015
Research consistently finds that men are more risk tolerant, or even risk loving, than women. This column argues that social identity, next to biology, helps explain the stark difference in risk attitudes and beliefs across genders. Men to whom identity is salient become more risk tolerant and invest more often and with more money. Identity makes men overconfident but its effects decrease with age. This is consistent with the notion that gender stereotypes have become less stark over the last decades.
Ginger Jin, Michael Luca, Daniel Martin, 22 July 2015
Theories of voluntary disclosure suggest that even when disclosure is voluntary, market forces can drive firms to completely reveal information about their quality. This column investigates these predictions in an experimental setting. Laboratory results suggest widespread failures of the theoretical predictions – senders do not fully disclose, and receivers are not fully sceptical about non-disclosure. This suggests a role for policymakers to help customers understand the sound of silence.
Daniel Feenberg, Ina Ganguli, Patrick Gaulé, Jonathan Gruber, 06 June 2015
If your surname begins with a letter at the end of the alphabet, you might have had that sneaking suspicion that it meant you were always picked last for sports teams, or always had your exam paper marked last when your teacher was tired and unforgiving. This column suggests that you might well have been right. New evidence suggests that academic papers presented at the top of a list are cited more simply because they are the first thing you see. In the digital age, many academic papers are competing for the scant attention of readers, and this column’s results indicate that details like presentation order really matter.
Allison Demeritt, Karla Hoff, James Walsh, 20 May 2015
Economists typically assume people behave in a rational and self-interested way, making standard models limited in their explanatory power. This column argues that psychological and sociological factors – though usually ignored in economic models – affect decision-making. The findings, drawn from the World Development Report, further suggest that better behavioural understanding could subsequently aid development efforts.
Christine Exley, 27 December 2014
Decisions involving charitable giving often occur under the shadow of risk. A common finding is that potential donors give less when there is greater risk that their donation will have less impact. While this behaviour could be fully rationalised by standard economic models, this column shows that an additional mechanism is relevant – the use of risk as an excuse not to give. In light of this finding, this column also discusses how charities may benefit from structuring their donation requests in particular ways.
Raj Chetty, Emmanuel Saez, László Sándor, 11 August 2014
Peer review is at the heart of academic economics, but there are few professional rewards for submitting detailed referee reports on time. This column reports the results from an experimental study of referee motivation. Shorter deadlines ‘nudged’ referees to submit reports earlier. Cash incentives also reduced turnaround times, suggesting that any ‘crowding out’ of intrinsic motivation is small. Social incentives – publication of turnaround times – were more effective for tenured referees than shorter deadlines or cash incentives.
John Komlos, 24 July 2014
Many quantities fail to respond smoothly to price changes. This column stresses that the ‘endowment effect’ – a well-known behavioural economics concept – implies kinks in indifference curves at the current consumption bundle price. Such kinks may account for the stickiness of prices, wages, and interest rates.
Ben Ho, 13 May 2014
Apologies are often hard – that’s the point. An apology is due when trust is broken, and to restore trust the apology must be hard. This column discusses a model of apologies as costly signals with some recent experimental evidence.
Paul Seabright, 18 May 2012
Paul Seabright of the Toulouse School of Economics talks to Viv Davies about his book, "The War of the Sexes: how conflict and cooperation have shaped men and women from pre-history to the present”. He explains how game theory can shed light on the complex dynamics that create both conflict and cooperation between the sexes. They discuss the connection between the rise of modern capitalism and the rise of feminism, monogamy and marriage and whether there will ever be sexual equality.
James Choi, Emily Haisley, Jennifer Kurkoski, Cade Massey, 28 March 2012
As if today’s problems aren’t enough, in the coming years Europe faces what economists are calling a ‘demographic timebomb’, with ageing populations placing an unsustainable burden on already precarious public finances. In order to encourage more people to save for themselves, this column argues that using a psychological intervention can increase contributions to retirement savings accounts by up to 2.9% of income.
Jesús Fernández-Villaverde, Nezih Guner, Jeremy Greenwood, 19 January 2012
Does shame impact teenage sexual behaviour in modern times, when contraception is readily available? Do peers matter for this behaviour? What is the relative importance of each of these forces? This columns aims to answer these questions using a survey covering 90,000 US high-school students. It argues that shame is an important driver of sexual behaviour among teenagers even when peer-group effects are considered.
Gábor Kézdi, Robert Willis, 19 December 2011
How to ordinary people form their beliefs about the economy? These beliefs then shape the decisions they make and can, if widely held, prove to be self-fulfilling. This column looks at surveys of ordinary people in the US and finds that the beliefs people hold and the reasons behind them vary almost as much as the outcomes they try to predict.
Andrew Healy, 09 December 2011
At this week’s summit on the future of the euro, Angela Merkel will be one of few women in a room full of men. This column provides experimental evidence to suggest that women are often less driven by the desire to compete and have less belief in their abilities than men. The result is that even the highest ranks of power may be bereft of the most able of candidates.
Diane Coyle, 03 December 2011
Have economists been asleep at the wheel? This column reports from a conference on the psychology and economics of ‘scarce attention’. Among the ideas discussed is whether too much information can blind decision-making and whether this can explain why so many economists missed the warning signs of a crisis.
Chris Ellis, John Fender, 26 October 2011
For the Arab Spring it was Twitter; for the summer riots in London it was BlackBerry Messenger. This column explores how the latest technology is helping to accelerate ‘information cascades’, where people make decisions based on what they see other people doing – and getting away with.
Giacomo Calzolari, Mattia Nardotto, 19 September 2011
Do 'nudges' help people stick to their goals? The authors of CEPR DP8571 find that quick reminders can promote virtuous behaviour without the need for monetary incentives.