Wednesday, October 1, 2008

David Laibson Gets It

Here's a nice quick read from Wired Magazine at

Laibson believes that markets can be influenced, or corrected, by nudging human behavior. The reason for this is because people do not always act rationally, even if they do have sufficient information. In the example, Laibson shows that in companies that offer a 401k plan where participants must opt in, the participation is significantly lower than with companies that have a plan where participants must opt out.

Laibson is a Behavioral Economist at Harvard. Sounds like a very ripe field of work. I would love to learn more about how Behavioral Economics can be used to influence people and systems.

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