Economists have traditionally viewed consumers as relentless robots making rational choices. A vast body of evidence contradicts this notion of homo economicus and documents how limitations in self-control, memory, and attention systematically affect consumers’ choices. As the influence of these and further biases on the behaviour of ‘boundedly rational’ consumers is predictable, there is scope for a new behavioural approach to consumer policy. But should a behaviourally informed consumer policy respond to consumers’ biased choices, and if so, how? Should policy just focus on equipping smart consumers with better information to make more rational, deliberate choices? Or should we forget about such nanny state paternalism and leave consumers to the free, unregulated market?
The Behavioural Insights Series at the Hertie School of Governance will discuss these and related questions with leading experts from the field.