A solid understanding of consumer behavior is fundamental to the optimal design and study of consumer policies. Consumer behavior is not only affected by preferences and biases but also depends on information available in the market, producer incentives to exploit biased consumers and manipulate the disclosure of information, as well as existing market rules and institutions.
Optimal policy design incentivizes consumers and firms to behave in ways that allow the attainment of specific policy goals. Policy design requires rigorous and systematic assessment of the feasibility of particular policy goals given the constraints set by consumer behavior, markets and institutions.
Policy-makers are accountable for sizable economic resources invested in the making and enforcement of regulations so that policy evaluation has become a central instrument for consumer policies. Evidence-based policy evaluation provides insights on how to improve existing tools and how to more effectively design the institutional setting under which policies are implemented.