How Humans Behave: Implications for Economics and Economic Policy
Draft versions of papers and presentations are available as PDF files.
Session One Perception, Motivation, and Decision-Making: An Overview
The first paper will review what psychologists and others who study human behavior have learned about decision-making. It will explore how individuals acquire information, visualize the future, and make decisions. What motivates the individual's choice? What, if anything, is he trying to maximize? Do his decisions reflect a set of stable preferences? What roles do perceptions, social pressures, memory, and emotions play?
Presenter: Eldar Shafir Paper Professor of Psychology and Public Affairs Princeton University
Steven R. Quartz Discussion Associate Professor of Philosophy Computation and Neural Systems Program California Institute of Technology
Session Two The Behavioral Challenge to Economics
How does research by psychologists and other behavioral scientists challenge the economist's model of individual decision-making? How should we amend our views of individual consumption and investment decisions? Would these amendments make consumer behavior more or less predictable? What are the implications for our concept of utility? What can we say about welfare?
Presenter: Colin F. Camerer Paper Rea A. and Lela G. Axline Professor of Business Economics California Institute of Technology
Discussants: Dan Ariely Discussion (slides) Luis Alvarez Renta Professor of Marketing Massachusetts Institute of Technology
Alan S. Blinder Gordon S. Rentscheler Memorial Professor of Economics Princeton University
Robert H. Frank H. J. Louis Professor of Economics Johnson Graduate School of Management Cornell University
Session Three Labor Market Behavior
What can economists learn from psychology about labor market behavior? Why do individuals work, and how do employers and workers set wages? How important are the concepts of fairness and equity, for instance, and to whom do they apply? What are the macroeconomic consequences of long-term unemployment? How accurately do workers perceive inflation of different magnitudes? What are the policy implications?
Presenter: Truman F. Bewley Paper Alfred Cowles Professor of Economics Yale University
Discussants: Katharine G. Abraham Discussion Professor of Survey Methodology and Affliliate Professor of Economics Joint Program of Survey Methodology University of Maryland
Rafael Di Tella Discussion Associate Professor Graduate School of Business Administration Harvard University
Session Four Organizations
This session will explore how decisions are made in and by organizations such as firms, political groups, and markets. At a micro level, how do individuals make decisions within such organizations? How, for instance, do organizations shape individuals' perceptions, motivations, and opportunities? And at an aggregate level, how do individual decisions translate into organizational “behaviors”? What, for example, are the roles of power and politics in organizational decision making?
Chair: Jeffrey C. Fuhrer Senior Vice President and Director of Research Federal Reserve Bank of Boston
Presenter: Robert S. Gibbons Paper Sloan Distinguished Professor of Organizational Economics and Strategy Massachusetts Institute of Technology
Discussants: Tom Tyler Discussion University Professor of Psychology New York University
Session Five Savings
This session will explore how the results of behavioral research can help to improve our understanding of savings behavior. How do individuals decide when and how much to save? And how do individuals choose where to invest their savings? What are the roles of inertia and time inconsistency, for instance? And how accurate are individuals' perceptions of the financial risks they are likely to face? How can policymakers use behavioral insights to promote better savings decisions?
Presenter: Richard H. Thaler Paper Robert P. Gwinn Professor of Economics and Behavioral Science Graduate School of Business University of Chicago
Discussants: Alicia H. Munnell Discussion Peter F. Drucker Professor of Management Sciences Carroll School of Management Boston College
Drazen Prelec Digital Equipment Corporation LFM Professor of Management Sloan School of Management Massachusetts Institute of Technology
Antonio Rangel Discussion (slides) Assistant Professor of Economics Stanford University
Session Six Implications for Macroeconomic Policy
What are the implications of psychological and other behavioral research for macroeconomic policy? What can we learn from this research about the appropriate goals of macroeconomic policy and about the tradeoffs between them? How can we use behavioral research to improve our models, our forecasts, and our policy decisions?
Moderator: Henry J. Aaron Bruce and Virginia MacLaury Senior Fellow Economic Studies Program Brookings Institution
Discussants: Laurence Ball Discussion Professor of Economics Johns Hopkins University
The Honorable Donald L. Kohn Discussion (link to Board site) Member, Board of Governors of the Federal Reserve System
Janet Yellen Discussion Eugene E. and Catherine M. Trefethen Professor of Business Professor of Economics University of California at Berkeley