Behavioral economics

Prof. Sinan Aral speaks with Kara Miller of GBH’s Innovation Hub about his research examining the impact of social media on everything from business re-openings during the Covid-19 pandemic to politics.

Prof. Sinan Aral speaks with NPR’s Michael Martin about his new book, “The Hype Machine,” which explores the benefits and downfalls posed by social media. “I've been researching social media for 20 years. I've seen its evolution and also the techno utopianism and dystopianism,” says Aral. “I thought it was appropriate to have a book that asks, 'what can we do to really fix the social media morass we find ourselves in?'”

Bloomberg’s Noah Smith profiles Prof. Parag Pathak, who was recently awarded the John Bates Clark medal for his work using economic theory to improve the allocation of students to New York City public schools. “Pathak isn’t just a theorist,” writes Smith, “in keeping with economics’ age of data, he also does a lot of empirical work.”

Forbes Contributor Steve Banker highlights Prof. Yossi Sheffi’s new book, Balancing Green, which focuses on sustainability in business. As Sheffi explains, “many companies engage in sustainability initiatives to prevent them from having to react to a rising tide of sentiment,” writes Banker. “Getting ahead of these kinds of campaigns can be at the heart of a robust risk management program.”

In a Q&A with The Boston Globe’s Sarah Shemkus, Prof. Yossi Sheffi discusses his new book, Balancing Green, which examines “the challenges and benefits of ‘going green’ in a multilayered global economy.” Sheffi suggests green practices can be advantageous for companies because “certain things also cut costs and increase profit, like energy savings.”

Prof. Parag Pathak, winner of the John Bates Clark Medal, speaks to The Wall Street Journal’s Michelle Hackman about his research on school choice. “What I sometimes find frustrating in conversations about student achievement is they often get sidetracked from the issue of school quality,” Pathak says. “Our job as researchers is exploring the nuances and subtleties.”

Research by Associate Prof. Jared Curhan in Sloan found that back-to-back negotiations can be challenging, particularly if a person has recently been successful. “Hubristic pride may give you a false sense of confidence, and you may underestimate your next counterpart,” Curhan tells Aisha Al-Muslim at The Wall Street Journal. “That may make you not prepare adequately for the next negotiation.”

In an article for the Financial Times about the best economics books of 2017, Martin Wolf highlights new works by Prof. Andrew Lo and Prof. Peter Temin. Wolf writes that in Temin’s “important and provocative book, [he] argues that the US is becoming a nation of rich and poor, with ever fewer households in the middle.”

Bloomberg Businessweek reporter Arianne Cohen spotlights Prof. Andrew Lo’s research examining adaptive markets. Cohen explains that, “Lo’s hypothesis says people act in their own self-interest but frequently make mistakes, figure out where they’ve erred, and change their behaviors. The broader system also adapts.”

Tom Buerkle of Reuters writes about “Adaptive Markets: Financial Evolution at the Speed of Thought,” a new book written by Prof. Andrew Lo, which argues that it is possible for investors to beat the market. Markets seem unpredictable because traders are human and “make decisions using short cuts” rather than weighing all options, explains Buerkle.

Prof. Andrew Lo speaks with Barry Ritholtz of Bloomberg View about the field of economics. Lo explains that his new book chronicles his “intellectual journey from a diehard devotee of efficient markets and rational expectations into the realm of first psychology and behavioral finance, and then to neuroscience and how people really make decisions.”

A report released by MIT startup Cambridge Mobile Telematics (CMT) shows that one in four drivers were using a smartphone just before an accident occurred, reports The Boston Globe’s Matt Rocheleau. Prof. Samuel Madden, founder and chief scientist at CMT, explains that the study shows “people are using their phones a lot, and that’s playing a role in the accidents.” 

Wall Street Journal reporter Daniel Akst writes that MIT researchers have developed a way to “tap into the insight of the expert minority within a crowd—a minority whose views would otherwise be swamped in a simple majority vote or poll.” The technique significantly enhanced “the wisdom of crowds, reducing errors by more than 20%.”

An MIT study finds that online and in-store goods are sold at the same price 70 percent of the time, reports Meghan Woolhouse of The Boston Globe. Prof. Alberto Cavallo believes online and in store prices are typically the same because shoppers would likely react badly “to price differences for the same goods from the same retailer.”

An algorithm developed by MIT researchers helps extract the correct answer from a large group of people even when the majority of people answer incorrectly, writes Erin Ross for Nature. While previous assumptions viewed the average opinion of a crowd as correct, the algorithm identifies “specialists with special knowledge, like doctors,” explains Prof. Dražen Prelec.