Archive for the ‘Behavior Eco/Fin’ Category

Nudging to drive safely…

August 19, 2014

A superb summary by Katia Moskvitch of BBC on  how various nudges are being deployed to reduce road accidents and drive safely. And this too across many parts of the world. Hat Tip to Tyler Cowen.

Though, the lessons are not as easy to learn. One needs to be careful and not overdo the budges. The human mind gets used to it and starts ignoring them (we are predictably irrational always looking for short cuts and high speed):

(more…)

A research agenda for behavioral economics – modelling family first in economic decisions

August 19, 2014

An interesting article in BS. The author says in developing societies “family first” remains a key economic decision. Most businesses continue to put families first when it comes to passing on power to next generation. He says behavioral economists should try and look at this issue.

(more…)

The Business of Behavioral Economics..

August 14, 2014

Leslie John and Michael Norton of HBS explore how behavioral economics can help people overcome bad habits and change for the better.

This bog has covered a few of the examples earlier as well like stickk.com and other variants around stcikk.com:

(more…)

Why researchers need to climb down from their ivy towers and see the real world…

August 7, 2014

One doesn’t know when academicians and researchers became ivy league types. One way to look at ivy league is to differentiate a select set of universities/colleges from others. But then it has also moved into another direction where Professors/researchers ( I mean economics ones) are completely cut-off from the real world. The end result has been chasing research which matters little and little as days pass by. Even teaching has been highly inspirational as one sees a very different world from what is taught. What better way to explain this than the famous Occupy Harvard where students walked out of Prof Mankiw’s class.

So it is kind of odd to read articles like this. HBSWK reviews research of Prof Nava Ashraf of HBS. She apparently descends from the Ivy League and involves people for whom the researchis being done.

(more…)

Seeking the Roots of Entrepreneurship: Insights from Behavioral Economics…

August 5, 2014

Journal of Economic Perspectives’s new edition  has some articles on entrepreneurship.

A team of four econs have written this paper bringing beh econ perspectives to entrepreneurship. They say returns from entrepreneurship are not high. But variance is high. Why do we still have people trying their luck at opening their businesses?

(more…)

Changing default setting in India’s economic policy …a leaf from beh eco..

July 10, 2014

The big B day is over. Enormous noise and brouhaha going on. The blog will see whether it will write something on the budget laters.

Meanwhile, was trying to scan the economic survey -2013-14 presented yesterday. Chapter 2 which has become kinda famous for being different, this time it speaks on issues and priorities. It has the usual set of words which will please the market sentiment.

Came across these interesting lines in the middle:

Default setting for government intervention in the economy needs to change from ‘prohibited unless permitted’ to ‘permitted
unless prohibited.

Nice to see the words picked from behavioral eco literature. So far, the default for most eco activity in India is “Well, it must be banned till it is allowed”..this was fine in command and control economy. This default needs to change in the market economy to” Well, it is allowed till not banned”.

Simple play of words but changes the entire approach. That is what nudges strategy is all about…:-)

Behavioral economics and macroeconomic models…a review

June 26, 2014

John C. Driscol of Fed and Steinar Holden of University of Oslo write this paper.

It gives a good account of the progress made so far in introducing beh eco in macro models and challenges as well:

Over the past 20 years, macroeconomists have incorporated more and more results from behavioral economics into their models. We argue that doing so has helped fixed deficiencies with standard approaches to modeling the economy—for example, the counterfactual absence of inertia in the standard New Keynesian model of economic fluctuations. We survey efforts to use behavioral economics to improve some of the underpinnings of the New Keynesian model—specifically, consumption, the formation of expectations and determination of wages and employment that underlie aggregate supply, and the possibility of multiple equilibria and asset price bubbles. We also discuss more broadly the advantages and disadvantages of using behavioral economics features in macroeconomic models.

Nice way to start figuring the developments..

Moving on to behavioral indifference curves…

June 25, 2014

Prof. John Komlos of Ludwig-Maximilians University has this interesting paper.

He says it is high time we move onto behavioral indifference curves (which have kinks) from the usual indiff curves (which are smooth downward sloping):

(more…)

Importance of framing questions – an interesting example..

June 17, 2014

There is another interesting debate over whether the western world has run out of major innovations and are now going to be on a steady decline. Robert Gordan has been making this argument for a while. Ofcourse, there are people who disagree and say innovation likely to continue and generate future growth. Here are the debates — one, two, three.

Coming to the title of the post. Prof Gordon often asks this question which innovation do you value most – A toilet with piped water or a smartphone?

Are all of mankind’s best inventions behind us?

Economist Robert Gordon thinks so. When giving speeches, the Northwestern University professor often flashes a photo of a smartphone and a toilet on a screen and asks his audience what they would do if they had only two options: Keep everything invented up until 2002, or keep everything invented up until today—but give up running water and toilets. The answer to him is obvious: Indoor plumbing changed how people live, he says, smartphones are just a handier form of what already exists.

Which would you choose?

The answer here most likely (atleast for me) is toilets. Here there is a case of lack of supply as well. Much of India does not have toilets but phones have become too common.

But the same post takes a poll but frames the question differently:

Which invention of the past would you rather live without?

Here the choice is smartphones not toilets. But unknowingly you end up ticking on toilets!

Importance of framing the questions and nudging people into making choices.

 

Teaching Economic Concepts with a Bag of Chocolate..

May 27, 2014

Came across this paper via MR blog (the blog points to a different version though). It is written by Nicholas G. Rupp  of East Carolina University.

He points to an interesting way to teach basic principles of economics to a elementary school class via an experiment.

(more…)

Behavioral economics of unemployment and obesity

May 15, 2014

Nice article in WaPo (HT: MR blog).

It looks at this side-effect of rising unemp – rise in obesity. People are depressed on being unemployed and start eating:

(more…)

Road Safety – Choice Architecture in Sweden..

May 15, 2014

This blog had earlier pointed to this fascinating story on how Sweden managed to lower its road accidents and deaths.

Gulzar adds to the discussion from a behavioral perspective. He is mostly alert to the various nudges being implemented around the world:

(more…)

Economics of apologies…

May 13, 2014
Ben Ho  of Vassar College has this nice and different voxeu piece on economics of apologies.
Using beh eco ideas, he says apologies given with intent can be really powerful:

(more…)

Is enonomic performance mostly about telling macro stories effectively?

March 24, 2014

The behavioral impressions and biases are not just limited to micro behavior. They seem to be aggregating to macro level as well.

Robert Shiller in his recent piece says much of Japan’s recent revival is based on a powerful economic narrative:

(more…)

Think MBA Students Are Arrogant? Blame Their Narcissistic Teachers…

March 6, 2014

Narcissism  means to be self obsessed and apparently there is research going on this topic. The research has shifted from narcissistic executives who take higher risks in order to glorify themselves. Now the research has shifted to MBA students too.

Paatrick Clark at BW reports:

(more…)

Don’t believe the hype about behavioral economics..Really?

January 28, 2014

Allison Schrager a NY based economist says beh eco is mainly hype.

She says beh eco has not delivered the expected results:

(more…)

Keeping New Year’s resolutions…Some Behavioral insights..

January 1, 2014

The usually brilliant Cass Sunstein shares insights from recent research on human behavior (predictably irrational).

He says new year resolutions are like redemption coupons which people fail to redeem despite the apparent monetary benefits:

(more…)

Why insurance is the most misunderstood industry?

December 20, 2013

Wharon Profs.  Howard C. Kunreuther and Mark V. Pauly, have co-authored a book titled, Insurance and Behavioral Economics: Improving Decisions in the Most Misunderstood Industry.

In this interview, they say why insurance is the most misunderstood industry. Some think it like investments, others do not insure as events are low probability:

(more…)

Oscar awards to movies/actors giving behavioral economics insights..

December 19, 2013

A terrific post by Cass Sunstein. He gives Oscars to movies which have beh econ insights (HT: MR Blog).

He gives the awards for Best – Actor, Actress, Director and Picture..

(more…)

Shiller vs. Fama at Economics Nobel ceremony

December 11, 2013

The Prize lectures are up. We have both youtube videos and pdf slides.

Starts with Fama saying he does not know what a bubble is and Shiller defining a bubble..

Have just started watching…Superb stuff..Debate on financial markets at its best..


Follow

Get every new post delivered to your Inbox.

Join 1,376 other followers