Edited by Alain Samson With a Foreword by George Loewenstein and Rory Sutherland The Behavioral Economics Guide 2014 1st Edition Author information: Alain Samson (Editor) George Loewenstein (Foreword) Rory Sutherland (Foreword) Phil Barden, Francesco Bogliacino, Leigh Caldwell, Cristiano Codagnone, Tom Ewing, Gerhard Fehr, George Gaskell,, Asit Gupta, Elina Halonen, Juliet Hodges, Moritz Jäger, Alain Kamm, John Kearon, Francisco Lupiáñez-Villanueva, Henry Stott, Giuseppe A. Veltri (Contributing authors) Design and layout by Elina Halonen. Cover design adapted from Tilly Patsalis. Proofing by Mark Jones and Leigh Caldwell. Copyright © by the authors All Rights Reserved Requests for permission to reproduce materials from this work should be sent to [email protected] or directly to contributing authors. Suggested citation: Samson, A. (Ed.)(2014). The Behavioral Economics Guide 2014 (with a foreword by George Loewenstein and Rory Sutherland) (1st ed.). Retrieved from http://www.behavioraleconomics.com. Suggested citation for individual sections/authors: [Author(s)] (2014). [Chapter/Section Title]. In A. Samson (Ed.), The Behavioral Economics Guide 2014 (with a foreword by George Loewenstein and Rory Sutherland) (1st ed.)(pp. nn-nn). Retrieved from http://www.behavioraleconomics.com. II Behavioral Economics Guide – 2014 With Contributions By: III Behavioral Economics Guide – 2014 Contents FOREWORD George Loewenstein and Rory Sutherland: An Exchange ................................................................................................................................ VI PART 1 - THE BASICS An Introduction to Behavioral Economics .............................................................................................................................................................. 1 Rational Choice ................................................................................................................................................................................................................................ 1 Prospect Theory .............................................................................................................................................................................................................................. 2 Bounded Rationality ........................................................................................................................................................................................................................ 2 Dual-System Theory ....................................................................................................................................................................................................................... 4 Temporal Dimensions .................................................................................................................................................................................................................... 6 Social Dimensions ........................................................................................................................................................................................................................... 7 Summary and Implications ............................................................................................................................................................................................................ 9 Selected Behavioral Economics Concepts ............................................................................................................................................................ 13 References ..................................................................................................................................................................................................................... 28 PART 2 - RESOURCES Books Read by Behavioral Economics Group Members ................................................................................................................................... 35 Scholarly Journals with Behavioral Economics Content .................................................................................................................................... 37 Economics Journals ....................................................................................................................................................................................................................... 37 Psychology Journals ....................................................................................................................................................................................................................... 39 Marketing/Management Journals ............................................................................................................................................................................................... 42 Multidisciplinary Journals ............................................................................................................................................................................................................. 42 Postgraduate Programs in Behavioral Economics and Behavioral/Decision Science (taught in English) .......................................... 46 United States .................................................................................................................................................................................................................................. 46 United Kingdom ............................................................................................................................................................................................................................. 47 The Netherlands ............................................................................................................................................................................................................................ 48 Other Europe ................................................................................................................................................................................................................................. 48 Asia-Pacific ....................................................................................................................................................................................................................................... 49 PART 3 - APPLIED PERSPECTIVES Psychology and Behavioral Economics in Practice .............................................................................................................................................. 50 Nudging in the World of International Policymaking (Cristiano Codagnone, Francesco Bogliacino, Giuseppe A. Veltri, Francisco Lupiañez-Villanueva and George Gaskell) ................................................................................................................................................................. 51 Anlene: Habit Loop and Nudges Drive Brand Penetration and Frequency (Asit Gupta) ................................................................................... 59 Turning Human Understanding into Business Advantage (John Kearon and Tom Ewing) .................................................................................. 65 The Power of Rank: Behavioral Insights into Product Pricing (Henry Stott) ........................................................................................................ 72 Brands as Frames (Phil Barden)....................................................................................................................................................................................................... 78 The Behavioral Change Matrix – A Tool for Evidence-Based Policy Making (Gerhard Fehr, Alain Kamm and Moritz Jäger) ......................... 85 How Behavioral Economics Can Make People Happy (Elina Halonen and Leigh Caldwell) ................................................................................ 92 Beyond Academia: How Psychology Has Been Adopted in Advertising and Communications (Juliet Hodges) ....................................................100 APPENDIX Author Profiles .......................................................................................................................................................................................................... 106 Contributing Organizations ................................................................................................................................................................................... 110 IV Behavioral Economics Guide – 2014 Acknowledgements The editor would like to thank Benny Cheung, Gerhard Fehr, George Loewenstein, Roger Miles, Alexandra Sirianni, Rory Sutherland and Orlando Wood for their helpful feedback. V Behavioral Economics Guide – 2014 FOREWORD George Loewenstein and Rory Sutherland: An Exchange George Loewenstein to Rory Sutherland: Dear Rory, As you know, Alain Samson asked us to write a foreword for his Behavioral Economics (BE) Guide, hoping to gain the perspective of two people applying the science (if I can be so presumptuous) of BE in the academic/public and private sectors. I’m sure that Alain would appreciate some colorful fireworks to illuminate his guide, so, as the representative of academia, let me begin with a challenge: I’ve