- 13 Nov 2017
- Research & Ideas
Want to Be Happier? Spend Some Money on Avoiding Household Chores
In an age of time scarcity, buying our way out of the negative moments in the day is an important key to happiness, according to research by Ashley V. Whillans, Michael I. Norton, Elizabeth W. Dunn, Paul Smeets, and Rene Bekkers. Open for comment; Comment(s) posted.
- 05 Oct 2017
- Cold Call Podcast
How to Promote Home Delivery of Prescription Drugs? Give Employees a 'Nudge'
When Express Scripts wanted to convince corporate clients to switch to home delivery of prescription drugs, they knew logic wouldn't prevail. What then? John Beshears explains the answer, psychological nudges, in this podcast. Open for comment; Comment(s) posted.
- 19 Jul 2017
- Research & Ideas
Why Government 'Nudges' Motivate Good Citizen Behavior
Research by John Beshears and colleagues finds that psychological nudges can be a cost-effective way for governments to get citizens to do the right thing. Open for comment; Comment(s) posted.
- 14 Dec 2016
- Working Paper Summaries
The State of Small Business Lending: Innovation and Technology and the Implications for Regulation
New online fintech competitors have entered the small business lending space, filling a gap in small-dollar loans. More than 70 percent of small businesses seek loans in amounts under $250,000 and more than 60 percent want loans under $100,000. Gaps in regulation of the alternative small business lending market create issues of oversight and concerns about predatory lending. The paper first describes the current market for small business lending, including the new disruptors, and presents strategic alternatives for existing banks to partner with fintech entrants and compete in the new environment. The authors then describe the current regulatory environment with its large number of agencies, each with overlapping authority and mandates, and provide a set of recommendations for regulatory activity that will protect borrowers and investors in this space. These recommendations address concerns about systemic risk while trying to avoid dampening innovation that is filling the gap in small business access to credit.
- 06 Jun 2007
- Research & Ideas
Behavioral Finance—Benefiting from Irrational Investors
Do investors really behave rationally? Behavioral finance researchers Malcolm Baker and Joshua Coval don't think humans are such cold calculators. One proof: Individual and even institutional investors often give in to inertia and hold on to shares in unwanted stock. And therein lays opportunity for investment managers and firms. Key concepts include: Far from acting in their own best interest, many individual and institutional investors are more inertial than logical when it comes to emptying their portfolios of unwanted shares. Behavioral finance replaces the traditional and idealized idea of rational decision makers with real and imperfect people who have social, cognitive, and emotional biases. The resulting inefficiencies in the capital markets can create opportunities for investment managers and firms. Closed for comment; 0 Comment(s) posted.
Can Financial Innovation Solve Household Reluctance to Take Risk?
Structured products are an innovative class of retail financial products with option-like features. This paper provides empirical evidence suggesting that innovative financial products like these can help alleviate loss aversion and thus the low participation of households in risky asset markets.