Message to New and Prospective Students at Cornell University for Applied Behavioral Economics in Finance and Marketing (AEM 6150 – Spring 2022)

Welcome to Applied Behavioral Economics in Finance and Marketing (AEM 6150)!

This new course is geared toward developing knowledge, ability, and professional skills to apply behavioral economics in business settings. The course is especially geared toward students who may consider future professions in consumer finance, marketing, product development, data science, or consulting/advisory. Because this is a 7-week course, I assume that you have some exposure to behavioral science concepts (e.g., AEM 6140 – Behavioral and Managerial Decision Making or equivalent background). If you do not, I have identified some supplemental readings in the syllabus that you should consider reviewing; you should also contact me (sds77@cornell.edu) so that we can better assess whether the course is right for you.

In terms of personal background, I am a new, incoming faculty member at Cornell. I have a non-traditional background and have spent more than 30 years in the corporate world with more than a decade of those years setting up behavioral science units and initiatives in the real world (e.g., nudge units). I continue to work full-time as a consultant and researcher in the behavioral economics space. I especially bring my experience in setting up some of the first nudge units in the world to the design of this course (which includes some cases from companies I have worked with). I am also a Cornell alum who has had a very fortunate career, and so I have a deep attachment to the community here. I would like you to be challenged in this course and succeed in life beyond Cornell. If you would like to learn more about my background, please refer to my bio.

Thank you for considering taking this course. Please feel free to reach out to me via email if you have any questions (sds77@cornell.edu).

Things a Consultant Can Do to Increase the Chances of Their Recommendations Being Implemented Successfully by a Client

This post is based on a question that was posed to me on Quora.

Here are a few things to consider for this type of situation:

  • See if you can get a resource assigned within the company to take the lead on program managing changes into the organization. Also to help increase the probability of success, see if the incentives of the assigned resources and sponsor can be aligned with the initiative outcomes.
  • If you have the skillset and desire, propose extending your contract to potentially help with piloting and incubating the new changes. You could structure your contract to include performance outcomes if you haven’t already done that for the prior phase.
  • Potentially partner with another consultant that has experience with implementing changes within an organization. This could become part of a longer-run business model for you.

A Call for the Heterogeneity Revolution in Behavioral Science

This article should be on every modern behavioral science researcher’s reading list for a cohesive view of the future. It will take awhile for the community (both research and applied) to wrap our heads around elevating heterogeneity and context relative to main effects.

Bryan, C.J., Tipton, E. and Yeager, D.S., 2021. Behavioural science is unlikely to change the world without a heterogeneity revolution. Nature Human Behaviour, pp.1-10.

https://t.co/i2o04QfbVQ?amp=1

What Can User Experience (UX) Designers Learn from the Field of Behavioral Economics?

This post is based on a question that I answered previously on Quora.

Although it’s not exclusively from the realm of behavioral economics, the notion of A/B testing is something that I often try to work with companies to include. On the one hand this includes the capabilities of companies to integrate specific aspects of their product management, software development, UX, data science, and marketing processes. But it also means developing a research mindset that comes from the experimental side of behavioral economics. For example, if one really wants to nail down which aspects of a UX or customer experience affect behavior and outcomes, the gold standard is using randomized assignment, A/B testing, and discipline that between testing conditions only one item is changed. In setting up the A and B test conditions for a behavioral insights based UX isolation test, one can add, subtract, or substitute a single element between two test conditions. If you change more than one element, then your findings will be confounded between the multiple elements changed, and you won’t be able to tell what change worked or didn’t. UX teams should become used to working in worlds that include testing harnesses like Visual Website Optimizer, Optimizely, and the like.

For a little more on A/B testing, see this WSJ article by one of my colleagues. It describes a simple, but extremely powerful A/B test we worked on with a FinTech company’s UX. It’s Time to A/B Test Your Financial Life

If you are interested in other aspects related to the digital UX world and behavioral economics, you might also want to check out a book that was written by two of my colleagues: The Smarter Screen: Surprising Ways to Influence and Improve Online Behavior.

What Does a Chief Behavioral Officer Do?

This post is based on a previous question posed to me on Quora.

The role of a Chief Behavioral Officer (CBOs) varies, but a common theme I’ve seen is that they analyze, plan, innovate, and implement aspects of the business using insights and methods from the behavioral sciences (e.g., behavioral economics, psychology). Some of the companies with CBOs do mostly marketing communications or thought leadership (e.g., research) while others may get involved with bringing insights and designs to product development (e.g., applied research). Some CBOs may directly manage people, such as a team of PhDs, analysts, etc. as well as partnerships (e.g., with academic researchers). The approach of CBOs may also vary in terms of the science. For example, some may leverage pre-existing research. Others may work with big data (e.g., proprietary) and correlational or instrumental variable type analysis. Yet others may take an experimental approach (e.g., A/B testing) and work with product and service teams to directly measure how designs affect behavior and outcomes.

A key aspect of determining the activities of the CBO really come down to setting goals for the larger organization, assessing gaps and resources, and developing a tactical plan to meet the goals over time. As an example, for the past few CBOs I have helped, we often worked to develop 30–60–90 day plans to initially get the organization rolling with longer-term planning and thinking happening in parallel.