behavioral economics

The Three Laws of Human Behavior

Human behavior is remarkably complicated. And yet, just as Newton's laws of motion distill three fundamental truths about the physical world, the three laws of human behavior describe three fundamental truths of human behavior: People tend to stick to the status quo unless the forces of friction or fuel push us them off their path; behavior is a function of the person and their environment; every decision includes tradeoffs and the potential for unintended consequences.

Why We Use Less Information Than We Think to Make Decisions

How much information do you need to make up your mind? Our research in various domains of decision making shows that we make decisions more quickly and based on less information than we think. This has important implications in an age in which information is plentiful.

Nudge Action: Overcoming Decision Inertia in Financial Planning Tools

Robo-advisors help investors deal with the complexity of the stock market. However, users of these new decision support systems are not immune to decision inertia – repeating supoptimal investment strategies regardless their negative financial consequences. I investigate two possible nudges to help user overcome decision inertia in robo-advisory environments.

Good for Some, Bad for Others: The Welfare Effects of Nudges

Nudges have become popular policy instruments, for good reasons. However, recent studies show they might sometimes backfire or cause undesired distributional effects – differing impacts across people. Such studies highlight the importance of careful policy analysis that examines both the average and distributional impacts of nudges.

Supporting Decision-Making under Uncertainty: Nudging, Boosting or Both?

Heuristics play an important role in daily judgments and decision-making, but a scientific debate has been ongoing as to whether heuristics result in systematic errors or make us smarter. Both approaches have resulted in tools to support decision-making. Nudges address systematic errors and biases, while boosts support informed decision-making under uncertainty. But can these two opposing approaches be integrated into one framework?

Nudges in Personal Finance: The Case of Overdrafts

Unarranged overdrafts are financial products which help personal current account holders deal with outstanding balances or declined payments. However, consumers have the tendency to use these products too often, underestimating their negative financial consequences. Concerned by their financial well-being, the Financial Conduct Authority in the United Kingdom has begun to address the issue through the application of nudges.

All’s Well That Ends Better: The Need for an Emotionally Rewarding Finish Leads to Risk Taking at the End

New research shows how our motivational need for an emotionally rewarding ending affects decision-making.

Using Multiple Social Nudges to Reduce Peak Energy Demand

Can multiple social nudges be combined to achieve behavior change in electricity consumption? Find out in this post.

The ‘Interpersonal Gambler’s Fallacy’: When Similarity Backfires

New research shows that being similar to a previous winner can have radically different effects on people’s participation likelihood in sweepstakes – it all depends on the attributions people make for the winning outcome.

Financial Decision-Making in Action

People's failure to act is an important problem discussed in behavioral economics and finance. But inappropriate action can also be detrimental. Find out more about the action bias in this post.

Go to Top