June 2003
Editors: Richard W. Kopcke, Jane Sneddon Little, and Geoffrey M.B. Tootell

Conference Overview (950K PDF)
[also published in the final issue of the New England Economic Review]

Participants' biographies

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

Discussants:
Robert Boyd Discussion | Slides
Professor of Anthropology
University of California, Los Angeles

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

Duncan J. Watts Discussion | Slides
Associate Professor of Sociology
Columbia 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

Presenters:
Daniel Benjamin Paper | Presentation
Economics Department
Harvard University

David I. Laibson Paper | Presentation
Professor of Economics
Harvard University

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