Choice

Architecture
Report
2020
 Transforming society and the economy
through scientific thinking

2
Contents Contributors
04 34
About this Report BE in Transportation
CASE STUDY: Reducing Fare
Kelly
04 Evasion with Behavioral Economics Peters
About BEworks MBA
37 Co-Founder & CEO
05 BE in Marketing
Letter from the CEO CASE STUDY: Brand
& Co-Founder Repositioning Using BE
06 Dan
The Story of BEworks 40 Ariely
BE in Healthcare
08 CASE STUDY: Increasing PhD
Rates of Home Dialysis Co-Founder & Chief
What Role Should Behavioral Behavioral Scientist
Economics Have in Companies? Selection for End Stage
By Dan Ariely Renal Disease Patients

10 42
BE is Not as Simple as ABC BE in Education Nina
by Kelly Peters CASE STUDY: Improving
Attendance of Adult Learners Mažar
14 PhD
A Human Science by David Pizarro 46 Co-Founder & Chief
The Future of Behavioral Scientific Advisor
16 Economics by Nina Mažar
How Scientific Thinking Demands
and Enables Creativity 48
by Nathaniel Barr BE in Artificial Intelligence
David
20 50 Pizarro
Industry Trends Evidence-Based Hiring: PhD
Finding the Best Employees Chief Science Officer
21 by Eliminating Bias
The BEworks Method by Dhushan Thevarajah

25 53
BE in Financial Services The Future of the Energy Sector
CASE STUDY: Nudging Impulse Nathaniel
Savings Contributions Among
Mid-Career Plan Members
56 Barr
Glossary
PhD
28 Scientific Advisor
57
BE in Energy References
CASE STUDY: Using Behavioral
Economics to Reduce 61
Electricity Consumption BEworks Around the World
Dhushan
30 62 Thevarajah
BEworks Leadership
BE in Policy MSc, MBA
CASE STUDY: Behavioral and Science Team Chief Operating Officer
Economics Applied to
Financial Disclosure
3
 About this Report
Welcome to the first BEworks Choice Architecture Report. We are passionate about understanding why
people make the decisions they do, and we want to help instill that passion in others. BEworks believes
science has the potential to transform the economy and society.

That’s why this document is more than just a summary of our work. In these pages you will find thought-
provoking pieces about the merits of insights and methods from behavioral science from our founding
partners, all of whom are regarded as thought leaders in the field. You will also find a number of industry
reports that showcase the latest developments in how Behavioral Economics is being applied to address
challenges across various industry domains. These industry reports have been prepared by our team of
renowned behavioral scientists, and feature case studies based on our learnings in working with Global
1000s and policymakers around the world.

The third section of this report provides information about our company, including our range of product
offerings, our team, upcoming events, and more.

About BEworks
BEworks’ purpose is to transform society and the economy through scientific thinking. We are recognized
as world leaders in the practice and commercial application of Behavioral Economics (BE). Our team of
scientists leverages cutting-edge research, behavioral insights, and the scientific method to solve our
clients’ most complex challenges.

4
Letter from the CEO & Co-Founder
With several Nobel prizes awarded to those in the field, and a growing number
of popular books, Behavioral Economics (BE) is increasingly gaining attention.
But many still ask, “What is it?” In my experience working with curious leaders
around the world, the question is best satisfied with examples. The intent
of this report is to help answer the question by providing case studies that
demonstrate how BE has addressed real-world challenges. As the world’s
first team dedicated to providing BE to the world’s Global 1000s, as well as
policymaker, we are able to draw from a rich portfolio.

The examples contained in this report show how Behavioral Economics can be applied to solve a
wide range of problems, whether found in marketing, finance, operations, organizational behavior, or
strategy. Furthermore, the examples show the novel approaches we have taken to help organizations
achieve their goals. From helping pre-retirees make better financial decisions, to tackling a literal free
rider problem in transit fare evasion, to helping drive adoption of innovative medical interventions,
to driving an increase in compliance with demand management strategies in the energy sector, the
challenges we have tackled involve employing a scientific understanding of human behavior. Our
portfolio also shows that BE can serve as a bridge between industries and their regulators because
its evidence-based rigor provides a common denominator to help achieve common ends.

Ultimately, Behavioral Economics helps organizations better understand the behavior of their
stakeholders. But it is more than just a collection of research insights describing the factors that
influence decision-making: Behavioral Economics provides powerful solutions to help people
become healthier, wealthier, and happier. Having led hundreds of studies in multiple countries for
some of the world’s most well-known brands, this report reflects a small portion of our work.

Over the course of ten years, our team has applied the BEworks Method, fusing the rigor of the
scientific method with the best practices from the discipline of project management, the powerful
insights about decisions and behavior from psychology, and the commitment to stakeholders and
bottom-line efficacy of management consulting. Alongside the growing number of talented members
of our team and our many clients and projects, I am proud to share this work with you and look
forward to unveiling more discoveries, insights, and future directions in this rapidly growing field
in the years to come.

Kelly Peters

5
 The Story of BEworks
Kelly Peters, MBA
BEworks Co-Founder & CEO

The idea of BEworks was born in 2010 with the 62% of the time with a median effect size of
intention of bridging the gap between academia 22%. It should also be understood from this
and industry. Our academic co-founders, Dan promising finding that behavioral interventions
Ariely and Nina Mažar, were looking for firms do not work all of the time, especially when they
willing to collaborate in academic research by have been implemented without a deep and
providing participants and data to support their rich understanding of how they were developed,
research. I was leading Behavioral Economics where they are most applicable, and what
projects at Royal Bank of Canada, looking for their limits are. However, when an organization
academic partners. And our other two Co- engages in hypothesis-driven experimentation,
Founders, Doug Steiner and Louis Ng, who are they may still gain valuable insights. Learning what
fintech entrepreneurs, saw the value in bringing doesn’t work and why can be just as valuable as
us all together. Beyond that, we believed finding what does; experimentation mitigates
that there would be companies interested in the risk of expensive failures and allows for the
behavioral insights that would be willing to run refinement of strategies. What is more important
experiments with us. So we launched our firm is embedding scientific thinking and practices
with our first client, Canadian Tire Financial deep inside organizations. We help companies
Services, who were looking for kinder, gentler be simultaneously bolder and more structured
ways of helping their clients manage and repay in their thinking, and we help them design the
the debt owed on their clients’ Canadian Tire organizational models to support a culture of
credit cards. This work is the subject of the nurturing and satisfying curiosity, leveraging
paper “If You Are Going to Pay Within the Next existing scientific knowledge, and driving
24 Hours, Press 1: Automatic Planning Prompt innovation through experimentation.
Reduces Credit Card Delinquency,” published
in the Journal of Consumer Psychology.1 With
a series of experiments with over one million
Scientists don’t need to
transactions, the project succeeded in finding
new ways to help improve debt management,
be business leaders, but
and Canadian Tire remains one of our most
valuable partners to this day.
business leaders ought
The purpose of BEworks has expanded
to be scientific thinkers.
significantly since its inception. We not only
We have been recognized as the world’s leading
help our clients solve their most pressing
Behavioral Economics management consulting
challenges, but we also teach them scientific
practice known for its dedication to rigorous
thinking and help them build their own behavioral
research, high standards, and most importantly,
insights capabilities. Now, rather than just help
our exceptional team. The 2017 acquisition of
firms work with academics, we have built a team
BEworks by kyu, while keeping myself and Dan
of scientists dedicated to bringing Behavioral
at the helm, has provided valuable confirmation
Economics knowledge and methods to life inside
of that perception. BEworks comprises over
companies. According to a quantitative review by
60 individuals operating out of more than five
Hummel and Maedche,2 behavioral interventions
countries and ranks as one of the world’s largest
(specifically nudges) lead to a significant effect

6
employers of PhDs outside of academia. Our on financial measures and the electronic systems,
bright and hardworking consultants have all including reporting and trading, to facilitate that
attained advanced degrees in fields such as evaluation and action. But big data is now
cognitive psychology, neuroscience, finance, available on a number of other measures, making
economics, and marketing. Prior to joining the aspirations of reporting on stakeholder value
BEworks, the members of our team worked on more tenable. That is, now companies can have
advanced scientific research, like the effects of an array of measures, such as value to employees,
old age on memory, the effects of hormones customers, and society, that they report on and
on emotion, and how learning occurs in non- can be evaluated on. Behavioral Economics
humanhuman animals (e.g., rats). These are is well-suited to develop those measures
people dedicated to helping humanity through of behavior, and furthermore, to develop
science. Before joining BEworks, they wondered strategies to help firms achieve success in gaining
how they could feel fulfilled as scientists while momentum and achieving those goals. JUST
working on business projects. The answer to this Capital, a not-for-profit 501(c)(3) registered
is that the research requires the same dogged charity launched in 2013, is measuring business
passion as working on the cure for cancer. We performance across 88 metrics. Only a few
use the same research methods of literature pertain to financial metrics; the rest are devoted
reviews, hypothesis testing, and designing and to how a company treats its workers, customers,
running randomized controlled trials. But more communities, and environment. Behavioral
importantly, the impact that we have is greater Economics is well suited to help with the design
than finding new ways to, say, increase the sales of these measures, but also with creating the
of frozen pizza. Rather, we show the impact that strategies to help organizations be a greater
scientific thinking can have on the organization. force for good and adopt business practices
For every person we work with who is exposed that advance a stakeholder model of capitalism.
to scientific thinking, one more person is better
equipped to demand evidence for claims such Scientists don’t need to be business leaders, but
as vaccines being bad for our health. By bringing business leaders ought to be scientific thinkers.
scientific knowledge and methods to a new Rather than building a bridge to academia, we
set of challenges, like how to increase energy have been building new foundations within
conservation, how to increase people’s likelihood companies. We are helping these teams become
to use and pay for public transit, and how to their own research institutes and hotbeds of
make it easier for people innovative research, so that they can best achieve
to optimize their financial decision-making, their goals, serve their stakeholders, and play
we are directly working to make the world their part in helping change society for the better.
a better place.

Our mandates are growing more complex,

more ambitious. Projects that only required
small nudges in the form of quick, one-shot
interventions have given way to broader,
more strategic initiatives. The low-hanging
fruit - such as optimizing enrollment forms -
is giving way to multifaceted programs to help
companies meet the urgent environmental,
political, and economic challenges facing our
world, including helping them “save capitalism.”
Shareholder value has traditionally served as the
crucial measure of a company’s success. This was
very much enabled by having the data to report

7
 What Role Should Behavioral
Economics Have in Companies?

Dan Ariely, PhD

BEworks Co-Founder & Chief Behavioral Scientist
James B. Duke Professor of Psychology and Behavioral Economics at Duke University

The most straightforward role that Behavioral Imagine you’re in a company and you want
Economics should have in companies is to help to change a certain behavior. You can make
people make more realistic assumptions about basic normative assumptions that come from
what drives human behavior. In general, one of economics about the people whose behavior
the main things that companies are interested you’re trying to change. You can assume they
in is to change the behavior of their customers are always rational, and always do what’s in their
and their employees. long-term best interest. You can also assume
that people consider all the alternatives with
Companies want their customers to either buy no emotion influencing their decision-making.
one product or service over another, or use it If you make those assumptions about people,
in one way or another, or they want customers and create a plan for how to change a behavior
to subscribe to one thing over another, and so based on those assumptions, then you’re going
on. Similarly, companies want their employees to change the behavior of highly rational people –
to care more, focus more, waste less time and but not the rest of us.
resources, or be more innovative. Behavioral
Economics, in its most basic form, is the science What this means is that if you have assumptions
of behavioral change, which means that it is a about what drives behavior that are purely
model of human behavior that is closer to what rational, the odds are that your attempt to
actually drives people. That’s why understanding change behavior is going to fall short.
Behavioral Economics helps us drive behavior
with higher likelihood of success. On the other hand, having more realistic
assumptions about what drives human behavior

8
– understanding the role of emotion, the role of our business, something that is incredibly
of habit, how attention works, and so on – is relevant, because we do the test in the same
more likely to lead to behavioral change. As a context of what we’re doing in our business.
company, when we consider what behaviors we
want to change, it is incredibly useful to take the
knowledge from social science, from Behavioral
Experiments are microcosms
Economics, and think more carefully about
the true underlying elements for motivation
for trying new things, failing,
and behavioral change in order to make more
realistic assumptions. That’s the first role for
learning from the failure
Behavioral Economics in your organization. It’s
not too complex, but it’s incredibly needed.
about what to do next, and
It’s also important for companies to not just be
embracing failure as a part
consumers of Behavioral Economics, but to also
generate their own research. There are many
of the learning process.
reasons why this is important. First, experiments
allow us to imagine a new world, a world that we Experimentation has other benefits as well. Every
haven’t experienced yet. They allow us to test time you do an experiment trying two strategies,
that new world and see whether the world that one of them is going to be better than the other
we’ve created is a better one than what we one. We just don’t know which one. Experiments
have right now. often show us that we’re wrong, or they prove to
us that our intuitions are not as powerful as we
thought. From that perspective, experiments are
For example, take something as simple as a
not just about getting specific knowledge about
return policy. A company might ask: what would
one thing over the other. They are a metaphor.
happen if we change the return policy of our
They are the training wheels for taking risks and
products? Would people feel that they have a
experiencing failure, all in the pursuit of better
reduced risk in trying them out? And would they
knowledge.
return them? Would they try more products
and buy more and return less? We can ask:
what would happen if we try to create, not just When I think about one of the big differences
a one-time behavior, but try to create a habit between companies who are incredibly
for how to use a particular product? Through successful and companies who are not, part
experimentation, we can test these hypotheses of it is the following: how many new things do
and see whether an intervention creates a they try? What is the cycle of trying new things?
world that is better, and get closer to our Experiments are microcosms for trying new
ultimate goal. things, failing, learning from the failure about
what to do next, and embracing failure as a
part of the learning process.
Businesses can use Behavioral Economics to
help inform their assumptions about the world
and to test new things. When we test these new In addition to the specific insights from Behavioral
things, we don’t rely on general knowledge that Economics, and in addition to doing experiments
has been created in all kinds of environments. By within a particular domain and getting knowledge,
conducting these tests, we get to learn whether I think that Behavioral Economics has another role
our assumptions about the world are true. We to play: it’s about having more humility, because
basically figure out a particularly important piece there’s nothing that helps create humility as much
of knowledge for something that is at the core as realizing that we’re not always correct.

9
 BE is Not as Simple as ABC
Kelly Peters, MBA
BEworks Co-Founder & CEO

Did you hear the one about the bat and ball? These aren’t just riddles; they provide
revealing diagnostics of how people think.
A bat and a ball cost $1.10 in total. The bat costs They demonstrate foundational theories
$1.00 more than the ball. How much does the ball about how our brains work. Perhaps owing to
cost? On average, two out of every three people, evolutionary causes,6 we don’t and can’t approach
including students pursuing their master’s degree every choice with our full cognitive capacity;
in business administration literally sitting in their in other words, our rationality is “bounded,” or
classes, guess ten cents, rather than the correct limited by the constraints of thinking capacity,
answer of five cents.3,4 available information, and time.7 How we think
can be explained by dual-process theory,8,9,10,11,12
which suggests that it can be characterized by
How about Linda, the bright, outspoken bank teller? two cognitive processes: the so-called “System 1”,
She’s 31 years old, single, and majored in which executes decisions quickly, from the gut,
philosophy. As a student, she was deeply and without much reflection, and the so-called
concerned with issues of discrimination “System 2,” which is more deliberate and requires
and social justice, and also participated in conscious thought and effort. Furthermore,
anti-nuclear demonstrations. Which is more as the Linda problem reveals, we are guilty of
probable? That she works as a bank teller “predictably irrational”13 patterns
or that she is a bank teller and is active in of thoughts such as the conjunction fallacy.
the feminist movement? Even 80% of the
professional statisticians surveyed by Tversky Collectively known as heuristics and biases,
and Kahneman did not apply the rule that you might have read the popular books on BE
the probability of two events occurring in that seem like encyclopedic lists of them. The
conjunction is always less than or equal to the Wikipedia page for “cognitive bias” provides
probability of either one occurring alone.5 It is over two hundred of them. It is difficult for even
more probable that she is a bank teller than expert-level practitioners to keep up with this
that she is a bank teller and active in the rapidly expanding body of research.
feminist movement.

10
To complicate already complicated matters, someone to figure out the correct answer. For
science doesn’t sleep and the biases that have instance, when presented with the question
already been identified and explained are “A Ferrari and a Ford together cost $190,000.
undergoing constant scrutiny, refinement, The Ferrari costs $100,000 more than the Ford.
and in some cases, refutation and dismissal. How much does the Ford cost?” people are more
Despite their impact on researchers and likely to get the correct answer (intuitive answer
popularity with teachers, there are challenges $90,000: correct answer $45,000) than when
with these examples that should serve as a it was constructed along the lines of the bat-
caution to enthusiastic students of the field. and-ball problem. Why? Because most people
have prior knowledge that a Ford isn’t likely to
While the degrees to which cost $90,000, and if we arrive at that answer,
the contradiction with our prior knowledge
people use analytical versus causes us to pause and rethink. Further work
also challenges the idea that these decisions
intuitive reasoning can be are made without any hesitation: De Neys et al.
found that when asked about their confidence in
predictive of their beliefs in their answer, many maintained a sense of caution
that their guess might not be correct.15 In other
many domains, when creating words, there’s a gut check to the gut instinct
that is not always accounted for when we are
strategies, consumer insights evaluating the mistakes of the gut. Because we
can demonstrate that there are degrees and
teams should dig deeper than conditions to a more reliable intuition (e.g., when
informed by prior beliefs), this should temper
simply attempting to bucket the idea that the science of thinking can be
wholly distilled into a dual-system model. This
people’s decisions into System 1 means then, from a practical perspective, that
while the degrees to which people use analytical
and System 2 thinking bins. versus intuitive reasoning can be predictive of
their beliefs in many domains,16 when creating
strategies, consumer insights teams should
The bat-and-ball problem serves as one of dig deeper than simply attempting to bucket
the fundamental Cognitive Reflection Tasks3 people’s decisions into System 1 and System 2
that demonstrates dual-process theory. While thinking bins.
dual-process theory is an extremely useful and
reliable construct for understanding decision-
There is a caveat to the classic Linda problem
making processes, there are practical limits
as well. Hertwig and Gigerenzer explain that
introduced by the simplicity of the model that
this problem is merely an example of how the
warrant caution. Trémolière and De Neys don’t
framing of a question can lead us to the “wrong”
think it provides an allowance for the roles
answer.17 In other words, it can be likened to
that our knowledge and prior beliefs play in
a case of a semantic debate with an annoying
(reasonably) guiding our intuition.14 In the case
grammar-policing member of your family, like
of the bat-and-ball example, the numbers were
when you ask them if they can pass you the
illustrative and it is merely a trick of the math
salt, and they respond with “Yes, I can” and then
that catches us. In their words, the question
pointedly refuse to act on what you meant by the
itself “strongly leads people to rely on intuitions
question. So, instead of being guilty of making
to give an easy, automatic but incorrect answer”
erroneous statistical judgments, people may
(p. 489). They proposed modified examples to
instead be inferring additional information based
test how people answer similarly constructed
on the content relayed in the Linda question.
questions, ones where prior knowledge can help

11
 The inference might be wrong and guilty of other in ambiguous social situations, driven by the
biases like stereotyping, but the good news is assumption that the surrounding people know
that this “mistake” may be grounded in a useful what to do.18 A positive example: when you
intellectual skill: that of being able to derive explain that 8 out of 10 people are doing a
meaning from what the speaker intends, not good thing, it will have a compelling effect
just what they say. This is not to say that people on nudging others to follow along. It is also
don’t make erroneous judgments based on how intuitively simple to understand the mechanism
they interpret information. However, pointing of how it works: it is logical in many cases to
out the weakness in this classic example follow the wisdom of the crowd; we assume
does demonstrate that we should expect that the crowded restaurant with the long line
scientists, philosophers, and practitioners to must be better than the empty one. However,
be as rigorous as the grammar police demand. social proof can promote bad behavior as
As researchers, we must always be vigilant in well as good. In other words, it’s like when my
saying what we mean and be willing to correct daughter says when she wants to stay out late
ourselves when necessary. on a Friday night - “everyone else is doing it.”
Cialdini et al. demonstrated this when they
So, despite what can be construed as guidance were studying how to stop people from stealing
from popular books aptly titled Thinking, Fast wood from the Petrified Forest National Park in
and Slow, intuition doesn’t necessarily make us Arizona.19 The forest had just been added to the
blind and happy fools after all. The lesson for list of America’s 10 most endangered national
practitioners and interested parties is that BE parks. Cialdini and his team tested various pleas
is way more complicated than having familiarity to preserve the natural state of the park by
with popular books and core concepts. modifying the language used on three-foot wide
signs at the park’s entrances. One sign used
So how are we to make sense of this? How can negative social proof: it read “Many past visitors
we use it if it’s so complicated? How can we use have removed the petrified wood from the park,
BE to debias our own decision-making, let alone changing the state of the Petrified Forest,” and
to apply these insights to real-world challenges? was accompanied by pictures of three visitors
Some practitioners advocate for eliminating taking wood. This social proof condition yielded
biases. While there is overlap, redundancy, the worst rate of theft of all conditions, which
and an absence of definitional and conceptual included positive social proof (“Many people left
clarity in both the biases and the interventions the wood…”) as well as negative and positive
that supposedly correct them, just reducing the directives (“please leave the wood”, “don’t take
number of biases isn’t a scientific solution to the the wood”). In other words, the negative social
problem. Replacing the messy state of BE with proof encouraged rather than discouraged
a handful of developing theories to explain all the targeted behavior. Since Cialdini’s ground-
of human behavior is at best misguided at this breaking research on social proof, it has since
stage; there is still too much to learn. been seen as a hard and fast rule to apply when
nudging behavior.
The answer to the riddle of how to improve BE
is obtained from its application to real-world Social proof interventions are seemingly
challenges. First, let us review another classic simple to design and play upon a fundamental
example from the BE repertoire to further insight about human behavior that is easy to
demonstrate the point about the complexity understand. Straightforward, right? Turns out,
of BE, and then we can explore the implications even practitioners can be stymied by the
for practitioners. One of the most well-known nuances and unknowns of BE. When Wikipedia
nudges (small interventions to subtly influence used negative social proof in its fundraising
behavior) in Behavioral Economics is social appeals with “...fewer than 1% of readers give”
proof. Social proof describes how people and/or “... 99% of readers don’t give”, obviously
follow others for guidance on how to behave expecting donations to increase, several went

12
to social media to chastise the company and In short, BE is not as simple as ABC. While it
explain how the campaign messages ought to may seem expedient to apply an intervention
be written from the angle of positive social to a problem in one-size-fits-all format, this
proof. Some even teasingly pointed out that approach itself is biased (the over-use of a
the Wikipedia crew hadn’t referenced the Wiki tool) and treats every problem (like the theft
on social proof within its own pages. Against the of irreplaceable natural resources at a park)
reasonable predictions of many, it worked. The as a nail to be pounded by a hammer (by using
Wikipedia team had the power of experimentation social proof). It falls on us as good scientists
on its side; they explained in their 2018-2019 never to take concepts, such as social proof,
Donations Report that they had tested the and presume their efficacy in the field before
messaging along with many other variations applying adequate experimentation. We take
“dozens of times.”20 Negative social proof guidance from Cartwright and Hardie, who warn,
messaging increases donations, despite what “It is a long road from ‘it works somewhere’ to
we would have predicted. Wikipedia is following the conclusion that you need - ‘it will work here,’
scientific best practices; that is to say, staying and it is not an easy one to traverse” (p. 6).21 Our
humble and seeking insight from experts (“We response is to be more nuanced and in line with
engaged with some experts in the field and asked the refined principles of science: to be skeptical,
them to explore further why we consistently to generate testable hypotheses, and to run
see this finding”), fostering curiosity and trying reliable and re-testable experiments.
to identify what might be unique about the
context (“Is there something about a non-profit At BEworks, our dedicated team works in
or a donation context that alters the rules of alignment with good science by applying the
social proof?”), and continuing to experiment BEworks Method, a fusion of the rigor of the
to find what works best for them (“We plan scientific method with the novelty of behavioral
on continuing to conduct tests this coming insights, the discipline of project management,
year in hopes of finding conclusions around and the bottom-line accountability of stakeholder
the fundraising and non-profit context of management. In the BE in Action section of this
social proof”). report, you’ll see the importance of scientific
thinking and methods alongside behavioral
The lessons here might be hard to accept. There insights. Our promise to our clients, as well as
are so many wonderful insights from Behavioral to the field of BE, is to engage in good science
Economics that help us to understand what that is mindful and respectful of these scientific
it means to be human, and while it might be principles and to rigorously and ubiquitously
tempting to just accept the laundry list of biases apply them in all the work that we do.
and naively apply interventions (like anchoring,
the power of FREE!, social proof, and defaults)
expecting high-impact results, the implications
and applications are not elementary.

13
 A Human Science
By David Pizarro, PhD
BEworks Chief Science Officer
Associate Professor of Psychology at Cornell University

What comes to mind when you think of the word scientific method has built into it a way to
“science”? If you are at all like me (and close to find and fix these errors. It is robust. It is
my age), it might conjure images of Carl Sagan reliable. And in its purest form, it is as
talking about how stars are formed, of dissecting close to “objective” as humans get.
a frog in middle school, or learning to use a
Bunsen burner in chemistry class. Of course, you
might have studied science in a more advanced
The scientific method has
fashion later in life and you know that science
is more than that. But those images about what
built into it a way to find
science is, and of what scientists study, are
deeply ingrained in our culture and in our minds.
and fix these errors. It is
It’s hard not to think of scientists as people in
lab coats poking, prodding, and measuring things
robust. It is reliable. And in
dispassionately. Doing science can seem deeply
impersonal and objective.
its purest form, it is as close
That’s probably because it is. Science, at its core,
to “objective” as humans get.
is the method of systematically and carefully
observing the world around us, often with the But as powerful a tool as it is, it took us
aid of experimentation. It has yielded insights rather long to apply the scientific method to
about nature that can be shared and verified by understanding people. While stars, trees, and
anyone willing to learn, no matter who they are even (non-human) animals have been studied
or where they come from. And while scientists scientifically for at least 500 years (and arguably
have made any number of errors in the past, the much longer), the most basic aspects of human
psychology (such as perception, memory, and

14
 If you want to understand why people think the way they do, or
predict how they are likely to behave, the scientific method is
the most reliable tool we have.
emotions) are only about a century old. Why did behavior of their customers and employees,
it take this long? One reason is simply that many our motivation is also positive: it is simply that
believed that the human mind was something so we have every reason to believe that it works
fundamentally different from the natural world better than the other options. If you want to
that it couldn’t be studied scientifically. But I understand why people think the way they do,
suspect that there’s another reason: for many or predict how they are likely to behave, the
people there is an understandable hesitation in scientific method is the most reliable tool
viewing human beings—their thoughts, feelings, we have.
and behaviors—as the subject of scientific
inquiry. It can feel odd and uncomfortable If you remain concerned about how we treat
to think of other people as the objects of others, I applaud you and will simply add this: it
scientific investigation, as things that can be is work done by behavioral scientists (such as our
poked, prodded, or measured. I think that this own Nina Mažar and Dan Ariely) that has given
discomfort—even if never explicitly stated—might us the clearest understanding of how and why
be behind some of the reluctance individuals people might behave unethically (and importantly,
and organizations often have when it comes to what we can do to prevent such behavior).22 The
incorporating the tools of Behavioral Economics. scientific method is as powerful a tool as we
have for understanding human behavior. The only
If true, I think this reflects poorly on us as other real option we have to using the scientific
behavioral scientists. It means we haven’t approach is to not use it, and in doing so to
done a very good job at communicating the continue to rely on intuition and guesswork when
fundamental wonder and respect we have making decisions. This doesn’t mean you will be
toward the workings of the human mind, or wrong, of course. But it does mean that if you
of communicating the optimism we feel about are, you probably won’t know why.
what Behavioral Economics has to offer. Adding
to the problem, we often use technical terms
borrowed from other sciences to describe
our methods: terms like “experimentation,”
“observation,” and “manipulation.” For many,
those terms can (unwittingly) communicate
something cold or sinister about our task,
even when the reality is that many of us
engage in Behavioral Economics for the sake
of making positive changes (such as reducing
prejudice, increasing well-being and happiness,
or preventing people from making poor financial
decisions). And when we apply the scientific
method to help organizations understand the

15
 How Scientific Thinking
Demands and Enables Creativity
By Nathaniel Barr, PhD
BEworks Scientific Advisor
Professor of Creativity and Creative Thinking at Sheridan College

To some, the idea of instilling the scientific method into their business practices seems like a certain
way to kill creativity. The imposition of strict definitions, measurable outcomes, and controlled
testing can sound sterile and antithetical to creative thinking. Such views are often based on
misunderstandings or myths about the nature of both science and creativity.

What is science? underlying nature of reality through careful

Science is sometimes characterized as being observation and controlled experiments. The
useful for describing what exists, but not for learnings derived from the scientific method
creating what doesn’t. Of course, a moment’s enable new insights which help us build new
reflection on the history of innovation in science theories about the way the world, including
can dispel this—airplanes fly, medicine works, people, works, which in turn provides fresh
computers compute, and countless other ideas for strategies to change the world, or
examples show the close ties between science people, according to our goals.
and creativity. While scientific insights translated
into engineering marvels can satisfy some critics, What is creativity?
others may ask, “But what about marketing, The word “creativity” usually brings to mind
strategy, and operations—surely those domains endeavors in the arts, design, or music. But
are beyond the scope of science?” This kind of limiting creativity to these domains is based
question hints at a misunderstanding of what on a pervasive myth about creativity and how it
science entails and how far it can reach. Science is construed. Researchers who study creativity
refers to a systematic method for revealing the have a much broader definition than the average

16
person. In the scholarly literature, creativity is First, one must precisely define the concepts at
most commonly defined as that which is both hand. Take the concept of trust. To test whether
original and useful or novel and appropriate.23 or not your strategy increases trust in your
This definition allows for creativity to emerge organization, you must define exactly what trust
not just in artistic domains, but in any field means. Is it trust in employees or your brand
and in diverse forms. Understanding creativity that is important? Is it an emotional or rational
through this lens allows us to appreciate and trust you care about? In one experience at a
understand how science demands and enables major financial institution, the simple question
creativity through all stages of the scientific of “What do you mean by trust?” was hard for
method — from hypothesis generation to executives to answer, despite a common refrain
experimentation. The scientific method can that trust must increase. Once you settle on how
provide novel and useful insights that have to define the concept in question, deciding how
the potential to transform nearly any aspect best to appropriately measure it demands great
of a business for the better. creativity. Given the say-do gap – the observation
that there is a chasm between what people
Generating hypotheses report and their actual behavior – simply asking
When beginning to tackle a problem using consumers directly is not enough. One must come
science, one of the most important steps up with creative ways to index what is of interest,
is generating a hypothesis. A hypothesis is a preferably through actual behavior.
formal prediction of how one thing should
impact another. For example, you might have
a hypothesis that you can increase sales by
Finding novel and useful
expanding your company’s online presence.
Hypothesis generation can incorporate insights
ways to change behavior is
from intuition, experience, data, or existing
scientific research. Researchers who study
a prerequisite for a diverse
scientific thinking have shown how creative
thinking pervades this stage of the scientific
array of business objectives.
method. One of the most important forms of
creativity while making hypotheses is to use Surveying your institutional capabilities for
analogies.24 For instance, the hypothesis that methods through which to measure different
sales should increase through a bigger online concepts can yield innovative ways to index
presence might come from the idea that factors of interest and measure the impact of
using a bigger net will catch more fish. In new strategies. Next, of course, is developing
making hypotheses, business leaders can creative ways to intervene and drive people’s
draw from diverse sources of knowledge to behavior toward your desired outcome. Finding
unleash their creativity to create new and novel and useful ways to change behavior is
useful ideas about how consumers might a prerequisite for a diverse array of business
react to different strategies. objectives—no matter your sector, chances
are that you are in the business of behavior.
Generating strategies and designing experiments
Once you have a hypothesis, a scientific Enabling creative, evidence-based strategy
perspective requires that you test it. To To explain how scientific thinking produces
someone who thinks like a scientist, having a creative outcomes, consider this example
“good” idea is not enough to make significant from research conducted by BEworks Co-
strategic initiatives — you need evidence. This Founder, Dan Ariely. Dan and his research
stage of the scientific process is particularly team collaborated on a field experiment to
prone to being seen as uncreative, but running determine how to increase savings in a group
a good experiment requires not only smarts, of low income earners in Kenya.25 The research
but lots of creative thinking. team devised several hypotheses about how

17
 to increase savings, which they creatively
instantiated through interventions sent through
The history of science is full of
text messages. Strategies involved leveraging
loss aversion (people tend to prefer avoiding
surprises and counterintuitive
losses more than they prefer making gains),
financial incentives, and even an intervention
findings that reinforce the
in which some people were sent text messages
(seemingly) from their children, with the
importance of experimentation.
idea of appealing to their parent to save for
their future. All attempted interventions had
It’s important to note that even if hypotheses are
beneficial impact, but the most powerful one
not supported and no benefits of a new strategy
was surprising: the intervention that led to the
are apparent in the evidence, important lessons
biggest increase in saving involved giving people
still emerge. Learning that a strategy doesn’t work
a gold-colored coin, which had numbers that
in a controlled experiment is far preferable to
could be scratched off every time the person
learning it after a costly full implementation. Also,
made a deposit into their savings. The people
learning why a strategy doesn’t work is often the
in the study were instructed to keep the coin
genesis of one that does. The history of science
in a safe place, and they built a ritual around
is full of surprises and counterintuitive findings
the process.
that reinforce the importance of experimentation.
Now, imagine yourself as an executive confronted
The scientific method requires both exacting
with a choice of interventions to deploy, but
precision and original thinking at all steps.
without the advantages afforded by conducting
Scientific approaches enable controlled testing
a scientific experiment. Based on the answers
of both wild and safe ideas, thus providing
we regularly get when we ask people to predict
evidence that can inform creative strategies.
the outcome of this experiment, very few would
Incorporating science into your business will
choose a gold coin as an intervention to motivate
not kill your creativity — it will unleash it.
people to save. Without scientific testing, this
idea would likely never be implemented, despite
its positive impact. Only through experimentation
can we know the best strategy. Science enables
risk-taking in small doses, and the ability to try
unorthodox approaches, which may not otherwise
be implemented yet could yield great dividends.

Further Reading
Dunbar, K., & Fugelsang, J. (2005). Scientific thinking and reasoning. In K. J. Holyoak & R. G. Morrison (Eds.),
The Cambridge handbook of thinking and reasoning (p. 705–725). Cambridge University Press.

Peters, K. (2018, September 14). The best question to ask your team is ‘How do you know?’ Financial Post. Retrieved
from https://business.financialpost.com/executive/the-best-question-to-ask-your-team-is-how-do-you-know

Runco, M. A., & Jaeger, G. J. (2012). The standard definition of creativity. Creativity Research Journal, 24(1), 92–96.

18
BE in Action

19
 Industry Trends

We believe applying a scientific mindset to business challenges will allow

you to achieve your organization’s biggest innovation objectives. Being
scientific entails using insights from BE research to inform strategies,
and using the scientific method to test whether behaviorally informed
strategies are effective empirically.

Using our rigorous methodology and unique expertise in experimentation,

our team of behavioral scientists and business experts has applied
Behavioral Economics to improve communications, acquisition, product
design, retention, process optimization, pricing strategies, and many
other challenges. Our approach is amenable to any problem that involves
humans making judgments and decisions, making it useful in any sector
and applicable to nearly every business challenge.

In this section, we share our learnings from our work across many
business domains, identify the global trends impacting various industries,
and demonstrate the vital role Behavioral Economics can play to help
not only understand but also solve industry-specific challenges in these
domains. We have also included some case studies of our work as real-
world examples of how our method helps address complex business
challenges, such as improving attendance among adult students, or
reducing the incidence of fare evasion on public transit.

20
 The BEworks Method
The BEworks Method (Figure 1) represents a fusion of the rigor of the scientific method with
the novelty of behavioral insights, the discipline of project management, and the bottom-line
accountability of stakeholder management. This fusion provides a tried-and-true framework
and process for the real-world application of BE. The following summary of the different phases
of our method will both help you understand how we helped our clients achieve their objectives
in the past, and imagine how we might be able to help you achieve yours in the future.

RESEARCH STRATEGY IMPLEMENTATION

Behavioral Ideation & Build & Choice

Discovery
Diagnostics Design Lab Experiment Architecture

Study the Challenge Diagnosis of the Development & Intervention Tested Evidence-Based
from a Scientific Challenge Using a Prioritization of with Experiments Strategy
Perspective Behavioral Lens BE Strategies

Figure 1 Design Lab Impact Lab

The BEworks Method

Discovery Study of the Challenge from a Scientific Perspective

Discovery sets the stage for the rest of the journey through the BEworks Method.
It compels us and our business partners to think in scientific terms: to take a
challenge or problem (e.g., encouraging a client to purchase a combination of
products), and describe it in a measurable, observable fashion (e.g., we want
the client to purchase product X with product Y to increase product efficacy and
satisfaction). We gather all internal (company-based) knowledge and external
knowledge (consumer trends, consumer education, distributor presentation)
regarding the challenge and the assumptions around it (is it limited by internal
or external barriers?), as well as gathering other essential pieces of information
such as customer interviews, survey content, and big data. Defining our challenge
in a measurable and testable fashion allows us to ultimately measure the efficacy
of the interventions.

• Identify Measurable, Observable Behaviors: Define behavioral objectives

and targeted outcomes

• Ask how do you know?: Assumption-gathering and testing, examination of existing

data, assessment of how outcomes are measured, and what hypotheses exist

• Gather observations: Through interviews, surveys, new experience sampling

techniques, and big data (utilizing each method as needed)

21
 Behavioral Diagnosis of the Challenge Using a Behavioral Lens
Diagnostics Behavioral Diagnostics is an examination of the decision-points along the consumer
journey in order to identify heuristics and biases that influence the key behaviors.
Once the Behavioral Diagnostics phase has been completed, we can begin to
perform more thorough research with respect to biases and behavioral insights
within this sphere. For example, perhaps other strategies have been attempted to
deal with this problem before. The results of this deep-dive can provide a stable
foundation for action in the next phases of the BEworks Method.

• Conduct Behavioral Audits of the current state to identify the decision points

• Identify the Heuristics and Biases in the stakeholder journey for the
Behavioral Diagnostics Report

• Scientific Investigation: Perform a deep-dive review of existing scientific

evidence and proprietary research

Ideation & Development and Prioritization of BE Strategies

Design Lab The Ideation & Design Lab is where innovation and creative thinking can grow from
the fertile soil of the previous two steps. With a sufficient understanding of the
challenge our partners face, we can now develop hypotheses about what might
impact behavior. Perhaps there are factors other than cost that drive clients to
purchase product X and not product Y in tandem. Here, we can also identify and
define our arena of action (e.g., digital/email or in-field), the scale of our experiment
(e.g., number of participants), and other important factors such as cost, risks, and
potential impact.

• Leverage the BE Expert Think Tank & Interventions Framework to generate

specific, scientifically grounded strategies to impact targeted behaviors

• Identify innovative solutions that combine insights derived from our scientific
investigation and our expertise

• Collaboratively prioritize interventions based on innovation, scientific backing,

feasibility, risk, cost, and impact

• Build prototypes to test the strategic hypotheses collaboratively with Design Lab

22
 Build & Solutions Empirically Validated with Experiments
Experiment With testable metrics set, risks and costs considered, and size and scope
of experimentation established, it is time to empirically test our strategies.
Depending on the challenge, experimentation can be held in a lab, in the field,
or in many cases, both. Experiments can run in phases with varying scales, with
some phases including more participants and increasing levels of complexity.
Again, the purpose of experimentation is to collect reliable and measurable,
testable and observable data on which statistical analyses can be performed
to measure the impact of our interventions.

• Design scientifically rigorous experiments to test proposed interventions

• Develop creative but valid ways to test the hypotheses given environmental,
strategic, budgetary, time, or conceptual constraints

• Launch controlled lab and/or field experiments to measure the impact of

key BE features

Choice Development of Metrics and Market Launch Strategies

Architecture Choice Architecture is the final stage, which culminates in the assessment of
and strategizing around the results of our experimentation. The data from the
experiment is processed and examined with regards to the ramifications for our
initial hypothesis: does our data confirm our prediction about the relationship
between our intervention, or independent variable (IV), on our dependent variable
(DV)? Or has our hypothesis failed to produce a significant effect? Either way, the
results in the Choice Architecture report can yield valuable insights even if the
hypothesis was not supported. For scientific thinkers, all data drawn from good
experimentation is good data.

• Analyze impact on Key Performance Indicators to create a foundation

for interventions that are grounded in evidence

• Based on experimental evidence, provide specific recommendations and

communicate those recommendations to all necessary stakeholders

• Work with the team to support Final Rollout and ensure that full-scale
implementation goes smoothly and adheres to scientific principles

23
 Case Studies

24
BE in Financial Services
Financial decision-making is a challenge because suboptimal financial decisions due to mental
of our psychology, as well as other factors that rules of thumb that guide their choices. These
make it more difficult for us to make choices heuristics help with decision-making under
about money matters. Increasingly longer life some circumstances, but often mean people
spans, a decade of low interest rates following make poor choices and suffer the outcomes.
the global financial crisis of 2008, the rise These cognitive limitations, heuristics, and
of defined contribution pension plans in the biases are so pervasive that Dan Ariely, our
workplace, and government claw-backs of public Co-Founder, describes human decision-making
pensions given fiscal deficit struggles - all of as being “predictably irrational”.13
these factors mean that people need to make
choices, and are being forced in many cases to By identifying the predictable irrationalities of
take increasing responsibility for managing their consumer behavior, financial institutions can set
financial futures. These choices are risky, and themselves up to facilitate consumer outcomes
consequential - whether to save more, retire while being adaptive and successful despite the
later, reduce their quality of life in retirement, changing landscape.
or earn more on their investments. These
choices are also increasingly complex due to a One aspect of the changing landscape that
proliferation of innovative investment products warrants highlighting is that consumers can
and channels. An increasingly complex choice increasingly purchase investment products
architecture encourages investors to simplify without the input of a human advisor. As
their decisions through the use of mental behavioral scientists looking at the emergence
shortcuts and rules of thumb. This means of self-service models and robo-advisory
they are at risk of biased decision-making services, we see opportunities and also
that leads to suboptimal outcomes. potential behavioral risks that need to be
mitigated. On the one hand, research
While many organizations have attempted to solve suggests that consumers are more likely to
the problem of irrational investment decision- be honest and candid when they are providing
making, they have relied on traditional, but personal information through a non-human,
limited solutions such as providing consumers digital channel.28 This would support financial
with more information and education. Educating institutions in eliciting accurate information
investors by increasing their financial literacy has and better fitting product recommendations
not been effective.26 It may change intentions, to clients. Yet consumers are less likely to
making consumers intendedly rational, but due to forgive errors that are made by an algorithm
heuristics and biases, their subsequent behavior compared to a human analyst,29 meaning that
often does not change. They intend to make financial institutions need to have a strategy
optimal decisions but still behave irrationally.27 for remedying robo-advice errors, which could
otherwise damage consumers’ trust in the
A Behavioral Economics lens reveals that, in financial institutions. The advent of the
addition to having a poor understanding of robo-advisor also fundamentally changes
financial matters, even experienced and the role of the conventional advisor, and
well-educated financial consumers make the financial institution’s relationship with

By identifying the predictable irrationalities of consumer

behavior, financial institutions can set themselves up to facilitate
consumer outcomes while being adaptive and successful
despite the changing landscape.
25
 consumers. Consumers may be overconfident CASE STUDY
and not understand when it is appropriate or
warranted to seek the guidance of a human
Nudging Impulse Savings
advisor; they may therefore choose not to Contributions Among
take advantage of a higher-touch advisory
relationship to help with complex financial Mid-Career Plan Members
decisions, or to navigate a new stage in their
financial journey. Discovery
Historical data revealed that despite having
Another trend that we have observed recently is
access to a suite of savings products and
that an increasing number of financial institutions
planning tools, plan members were not engaging
are proactively applying Behavioral Economics to
in optimal behaviors, such as maximizing
safeguard consumers against the consequences
their employer-match, making lump sum
of predictable and well-documented biases
contributions, or making financial plans. Prior
that influence how they perceive and manage
data also showed that plan members who
financial risk. These safeguards take the form
engage in the above savings and planning
of process and documentation changes, as well
behaviors before entering the pre-retirement
as the training of investment advisors who learn
phase are less likely to move their money away
about how to mitigate the biases of consumers
when preparing to retire. We hypothesized
through the deployment of just-in-time nudges
that nudging plan members to save and plan by
and behavioral interventions. In this way,
driving so-called impulse savings contributions
Behavioral Economics is equipping advisors to
and using a digital planning tool would increase
help consumers build healthy investment habits
client retention.
that anticipate future pain-points such as
market volatility periods.
Behavioral Diagnostics & Ideation
BEworks applies a Behavioral Economics lens To increase uptake of the saving and planning
to dissect investor decision-making against the behaviors, one barrier that we tackled was the
backdrop of trends and changes like the ones lack of connection people have with their “future
described so far. In this way, we use scientific self,” which makes them generally unwilling to set
thinking to support better consumer and investor money aside or do immediate favors that would
outcomes. The first part of our method seeks benefit their future self, who is, for all intents and
to understand why people make suboptimal purposes, a stranger. To address this barrier, we
decisions, and then we develop and test potential developed communication focused on the Future
solutions using best practices from behavioral Self. We guided plan members to think about
science. An example of the BEworks Method in concrete life experiences they recently had,
action is detailed in the following case study. and to use this to imagine their future self.

A second key barrier that stops people from

saving and planning is that they may not feel
that the available expertise of their pension
plan administrator is necessarily valuable
or actionable. To address this challenge,
we developed communication focused on
Operational Transparency. This showcased
the effort that the pension plan administrator
made on a client’s behalf, both to understand
the plan member’s needs, and to make a
recommendation about a savings product
or planning tool that was personalized given
those needs.

26
Build & Experiment Choice Architecture
We tested the impact of our behavioral Our experiment demonstrated that Operational
interventions against a control condition by Transparency was the intervention that was the
running an in-field experiment with over 72,000 most successful at encouraging account activities.
plan members who received an email that invited It was found to be more effective than the Future
them to make an impulse savings contribution, Self intervention at getting clients to access and
and to use a retirement planning tool to start use a retirement planner tool, as well as to make
a retirement plan. We tracked how many plan immediate savings contributions. A question that
members made a savings contribution and used remains to be answered through future research
the retirement planning tool. Email provides is whether encouraging clients to engage in small
a flexible channel by which to test hypotheses account activities in the short term can deflect
which can then be deployed into other channels, them from making major transfers (e.g, moving the
such as conversation aids for the advisor to use entire account to another financial institution) in
with plan members. the long term.

Further Reading
Buell, R. W., & Norton, M. I. (2011). The labor illusion: How operational transparency increases perceived value. Management
Science, 57(9), 1564–1579.

Hershfield, H. E., Goldstein, D. G., Sharpe, W. F., Fox, J., Yeykelis, L., Carstensen, L. L., & Bailenson, J. N. (2011). Increasing
saving behavior through age-progressed renderings of the future self. Journal of Marketing Research, 48(S23-237).

Thaler, R. H., & Benartzi, S. (2004). Save more tomorrow™: Using behavioral economics to increase employee saving.
Journal of Political Economy, 112(S1), S164-S187

27
BE in Energy
Human creativity has resulted in massive innovations that
are disrupting the way we live and work. Figuring out how
CASE STUDY
best to adapt to these profound changes requires a deep Using Behavioral
understanding of human psychology and behavior. This
demand for strategies and solutions oriented to the way Economics to Reduce
people think and behave has brought Behavioral Economics Electricity Consumption
(BE), and BEworks, to the forefront in the quest to adapt to
a rapidly changing world. One of the most important areas In 2012, the Government of Ontario rolled
of change, both for our own well-being and that of the out Time of Use (TOU) pricing of electricity
planet, is the energy sector. to reduce consumption during peak hours
of day in order to ease the strain on the
The energy sector is experiencing a period of profound provincial electricity grid. TOU charges rate-
change, the scale and pace of which is unprecedented. payers higher electricity prices during high-
The maturing of renewable energy technologies, the demand times of day (“peak consumption”
proliferation of distributed energy resources, the declining periods). Although traditional economics
cost of battery storage, as well as changes in consumer would suggest that pricing should have a
behavior are all transforming the way we produce, use, direct influence on behavior, the pricing
and trade electricity. Industry experts predict that model fell short of expectations. To that
the existing electricity business model will change so end, the Provincial energy regulator wanted
dramatically that it will be unrecognizable by 2030.30 to measure the effectiveness of alternative
pricing structures on peak consumption. To
Amid all of these major shifts, energy companies have no complement this approach, the Provincial
choice but to rethink their current business models, develop regulator also sought to examine non-price
new products and services, and look for new ways to engage related interventions.
with their customers. They must actively shape customer
choices in a way that optimizes the customer experience. BEworks and its utility partner participated
Energy companies have to make these major adjustments in a pilot to test the impact of three separate
at a difficult time - they are facing flat or declining energy TOU pricing schemes, which varied the
demand as well as mounting pressure to manage costs, premium during peak times of day (a
grow earnings, and satisfy public shareholders. Satisfying traditional economic intervention), and a
these economic and political constraints while adapting non-price intervention (leveraging tactics
consumer attitudes and behaviors requires strategies from the field of Behavioral Economics) on
as innovative as the technologies causing the disruption. electricity consumption among a subset
It is our view that energy providers who understand the of Ontario ratepayers.
psychology of human behavior and decision-making will
be the ones who prosper in the energy sector landscape
Discovery
of the future.
In Discovery, we began by reviewing
That’s where Behavioral Economics comes in and lends evaluation and measurement reports
a competitive advantage. BE can provide companies describing the impact of the current
with game-changing insights into human psychology TOU pricing structure on the Province’s
and behavior, as well as the opportunity to test disruptive conservation objectives. We learned that
concepts in a controlled environment before more broadly after full scale rollout in 2012, Peak electricity
and universally rolling them out. In this regard, our clients in consumption reductions were measured
the energy sector are already leading the way, getting ahead at 3.26%.31 By 2014, Peak reductions were
of the curve by applying a behavioral lens to their most measured at just 1.18%.32
intractable challenges and using scientific evidence to
execute disruptive growth strategies.

28
Behavioral Diagnostics Choice Architecture
One challenge with changing energy Our impact analysis revealed that of the
consumption behavior is that the majority three pricing schemes tested, the one that
of people report favorable attitudes towards charged the largest premium yielded the largest
pro-environmental behaviors, yet a relative reductions in on-peak consumption during the
minority actually engage in such behaviors. One Summer months (consumption impacts during
reason for this intention-action gap is that the Winter months are forthcoming). In addition,
people are heavily present-biased, meaning consumption reductions were observed owing to
that we tend to value immediate rewards our non-price communications (Nudge Reports).
over similar or larger rewards in the future.33 Interestingly, one of the tested pricing variations
Long-term financial rewards associated with revealed no effect on electricity consumption
electricity consumption reduction may seem (despite an increase in commodity price by
trivial relative to the immediate sacrifices in around 50%), yet the beneficial effects of Nudge
convenience and comfort that must be made. Reports were still present. This supports the
idea that when financial incentives (a traditional
Ideation & Design Lab economic lever) fail to yield behavior change,
psychological levers drawn from the field of
Three new TOU pricing schemes were selected Behavioral Economics can be more effective.
for testing in consultation with our Utility
partner and the Provincial regulator. These
schemes varied primarily in the extent to which
customers were charged a premium for using
electricity during peak times of day.

Our non-price intervention was monthly

communications reports (‘Nudge Reports’)
that consisted of three behavioral tactics. The
Nudge Reports included consumption feedback
in the form of personal benchmarking,
personalized conservation tips, and a
consumption reduction pledge (Figure 2). The
idea was to provide meaningful feedback on
conservation efforts, offer customized tips to
achieve energy goals, and confer a sense of
ownership over conservation goals.

Build & Experiment

We designed and implemented a large scale, in-
field pilot that tested the independent impacts
of our price and non-price interventions
(against status quo TOU pricing) on consumer Figure 2
consumption behavior (using a combination of Example of Nudge Report
randomized and matched control trials). These
interventions remained in-field for a total of 12
months, during which time hourly electricity
consumption data was monitored for over
18,000 Ontario households.

Further Reading
Asensio, O. & Delmas, M.A. (2015). Nonprice incentives and energy conservation. Proceedings of the National Academy of
Sciences, 112(6), E510-E515.

Frederiks, E.R., Stenner, K., & Hobman, E.V. (2015). Household energy use: Applying behavioral economics to understand
consumer decision-making and behavior. Renewable and Sustainable Energy Reviews, 41, 1385-1394.

White, K., Habib, R., & Hardisty, D. J. (2019). How to SHIFT consumer behaviors to be more sustainable: A literature review
and guiding framework. Journal of Marketing, 83(3), 22–49.

29
 BE in Policy
Governments often enact regulations and policies meant to protect the best interests of consumers,
businesses, and institutions alike. In Canada, regulatory systems of this kind are particularly pervasive
in the financial sector. Although most policies are enacted with noble intent, it is important to question
whether such policies are effective, and whether the goals are reflected in outcomes. This issue cuts
across all levels and types of regulation, and policy makers must strive to ensure that good intent
translates to good outcomes.

Behavioral Economics provides an effective framework for the formulation and assessment of such
evidence-based policy. Insights from the science of behavior can be used to inform the formulation
of policies and regulations, and can help guide development of new approaches to reflect human
cognitive and emotional tendencies, addressing our irrational side. The scientific method can be
used to empirically measure how new policies impact citizens, and shed light on the positive and
negative impacts of new regulations, both expected and unexpected.

In order to illustrate the importance of BE in policy, consider our work with the Investment Funds
Institute of Canada (IFIC). The approach and findings from this engagement show the value of
behaviorally informed and scientifically tested policy.

CASE STUDY
Behavioral Economics Applied to Financial Disclosure
As part of its mandate to standardize financial Discovery
regulation in Canada, the Canadian Securities
Administrators (CSA) introduced rules governing Our first task was to develop an operational
how fees and performance information should definition of a successful disclosure, or what we
be disclosed to Canadian investors. These refer to as a Measurable, Observable Behavior
requirements, as outlined under the second (MOB). Interviews with representatives of
phase of the Client Relationship Model (CRM2), stakeholder organizations, including registered
are intended to protect Canadian investors dealer firms, the Mutual Fund Dealers Association
through increased transparency and awareness (MFDA), the Investment Industry Regulatory
of account performance and fees. Organization of Canada (IIROC), the Financial
Industry Regulatory Association (FINRA), and the
In their role as advocates aimed at strengthening European Fund Asset Management Association
the integrity of the investment funds industry, (EFAMA), concluded that “successful disclosure”
fostering public confidence in investment should be defined as:
funds, and enabling investors to achieve good
outcomes, the Investment Funds Institute of 1. Increasing retail investors’ comprehension
Canada (IFIC) wanted to ensure they had a of their statement
sound understanding of the implications of
the new requirements on investor behavior 2. Facilitating informed decision-making on
as well as to be in a position to provide the part of retail investors
evidence-based recommendations to industry
stakeholders. IFIC partnered with BEworks to 3. Increasing trust in the issuer of their
optimize the effectiveness of CRM2 reporting. statement and/or advisor

30
Defining What Constitutes Success for CRM2 Statements
Psychological Outcome What Constitutes Success

• Investors spend more time reviewing their statement

Attention • Investors display balanced attention: they are aware of all key
elements of their statement, rather than focusing on just one
element or another

• Investors better understand key elements of their statement,

including a) how much their account holdings increased/
Objective decreased in the past year, b) whether they made contributions or
Comprehension withdrawals in the past year, c) how much they paid in fees in the
past year, and d) what activities were funded by the fees they paid
(e.g., advice)

• Investors feel confident that they understand their CRM2

Subjective
statement (measures of subjective comprehension should
Comprehension
be positively correlated with objective comprehension)

• Investors think about or articulate a financial goal related

Informed to their account
Decision-Making
and Behavioral • Investors intend to engage in behaviors that support their
Intentions financial goals (e.g., seeking advice, increasing contributions
to their account, reviewing their investment goals)

Behavioral Diagnostics
We identified two categories of barriers preventing disclosures from achieving their desired impact:

1. Simple, tactical limitations in how 2. Complex barriers. Key among these barriers
information is displayed. This included is that the statements encourage investors
that the statements contain too much to engage in narrow framing that may not
information, it is difficult for investors to be goal-aligned, or long-term focused.
find the most important information, and Therefore, we hypothesized that investors
that there is too much jargon and technical may be more likely to focus on one element
information. We anticipated that “boosts” of the statement only, while ignoring other
(such as simplification)34 would be relevant elements, and that investors might focus
here – to enhance the statements. on short-term outcomes rather than long-
term ones.

31
 Ideation & Design Lab
We designed two new versions of the CRM2 statements that tackled these barriers:

BE Simple Statements
We built BE Challengers - the BE Simple Statements - that
served a two-part purpose:
1. Compared to the control statement, the features
of the Simple Statements were intended to “boost”
investors’ ability to understand their statement.
Accordingly, these statements consisted of shorter
text, simplified language, as well as color and
placement cues chosen to direct investors’
attention to key information.

2. Additionally, compared to the BE Comprehensive

Statements, the BE Simple Statements contained
text and formatting changes that were deemed
low risk and relatively easier to implement by
dealer firms (according to interviews with industry
representatives). For example, primary information
about the core elements of the statement were
chunked, and placed at the top of the page,
thereby introducing the “landscape” of the
statement so investors would know that there
are three key sections in the report, all of which
need their attention.

Traffic light labeling was also used to recognize and reinforce investors’ past actions (green was used
to signal to investors that making contributions to their account is goal-aligned and encouraged).

BE Comprehensive Statements

We developed BE Comprehensive Statements containing

an innovative set of nudge tactics, in addition to the
text and formatting boosts contained in the BE Simple
Statements. The tactics that were unique to the BE
Comprehensive Statements were intended to get investors
to take action in support of their goals, for instance, by
contributing more money to their account, or seeking
advice from a financial expert.

For example, these statements contained a Progress

Tracker telling investors how much they had saved towards
an investment goal of $150k. We hypothesized that
investors would be more likely to focus on and work to
achieve long-term goals when there is a clear goal for the
account, and their progress towards that goal is visualized.

32
Build & Experiment
We tested our new versions of the statement against the current statement with 2,597 Canadian
investors, who had a minimum of one investment account and one year of investment experience.
To determine the impact of each statement, we developed measures to assess investor attention,
objective and subjective comprehension, goal-based decision-making, and trust.

Choice Architecture
Basic boosts in the BE Simple Statements succeeded in improving investors’ understanding of
complex information in their statements. These boosts also helped investors to feel (justifiably)
that they had a better handle on the information in their statements.

BE Comprehensive Statements that incorporated the concrete Progress Tracker increased investors’
intentions to contribute to their accounts, and offset the potential of them focusing exclusively on
fees, even after fee saliency was increased through incorporation of fee benchmarking (see Figure 3).
In fact, despite increased fee saliency, investors were as likely to seek guidance from an advisor. This
suggests that increased information about fees does not disrupt trust in one’s advisor.

While this particular engagement was oriented toward a specific piece of policy aimed precisely at
a certain subset of the population, more general lessons emerged for policymakers. Firstly, even
simple changes to existing citizen-facing materials can bring positive benefits. Secondly, more
innovative solutions that leverage what we know about human behavior can be deployed to achieve
desired outcomes. Perhaps most importantly, this work illuminates how thinking scientifically
about policy challenges can help ensure that governments and regulators can improve the lives
of the individuals with which they interface. Systematically engaging with the research literature,
developing solutions attuned to how humans actually make decisions, and rigorous testing of new
ideas, can together help good intent translate to good outcomes.

Figure 3
Likelihood of transacting
as a function of condition

Further Reading
Cheema, A., & Bagchi, R. (2011). The effect of goal visualization on goal pursuit: Implications for consumers and managers.
Journal of Marketing, 75(2), 109-123.

Lewis, D.R. (2018). The perils of overconfidence: Why many consumers fail to seek advice when they really should. Journal
of Financial Services Marketing, 23(2), 104-111.

The full BEworks Report for IFIC: https://www.ific.ca/wp-content/uploads/2019/03/Behavioural-Economics-Applied-to-

Enhance-Disclosure-Practices-and-Investor-Outcomes-February-2019-FINAL.pdf/21963/

33
 BE in Transportation
vehicles to commute to work.35 Studies
Technological advances are rapidly changing the show that solo driving increases congestion,
way we move, and the transportation sector is carbon emissions, and crashes, and reduces
undergoing large-scale change. Massive access the quality of life in cities. While these facts
to information about transit, traffic, and mode are commonly accepted, most of us continue
of transportation holds promise in attempts to drive alone.35,36 How can we encourage
to reduce commute times, congestion, and people to switch to more sustainable modes
air pollution. Major cities around the world are of transportation? BEworks is using field and
shifting to integrated public transport systems online panel tests to uncover why people
aiming to cut down on operational costs while are not availing themselves of different
increasing efficiency and safety. Despite this transportation options, as well as developing
potential, technology does not provide all strategies to shift behavior for the better.
the solutions. In order for new transportation
modes to realize the benefits afforded by new Not only does shifting behavior in the
technology, people must make the shift to new transportation sector stand to improve lives,
modes of behavior. it can save them. According to the World Health
Organization (WHO), every year, the lives of
When it comes to transportation choices, approximately 1.35 million people are cut short
traditional approaches assume that people do as a result of road traffic crashes.37 Road traffic
what they consider is best for themselves. This injuries cause considerable economic losses to
position assumes that people rationally and individuals, their families, industry, and to nations
carefully weigh the costs and benefits to establish as a whole. One of the major causes of accidents
their preferences. However, Behavioral Economics is distractions. Everyone knows that using mobile
recognizes that preferences are not stable and phones while driving is unsafe; nevertheless, nine
can be influenced by a myriad of factors. People people in America will die today due to texting and
can be aware of more efficient transportation driving.38 Evidence shows that people understand
options, can understand ways to improve safety, the dangers of distracted driving, but over half
and can appreciate that collecting fares is an still reported talking on their phones while driving
integral part of maintaining a public transit and approximately a third reported they text
infrastructure, but this knowledge often does not while driving.39 The “say-do gap” is a phrase
translate to increases in facilitating mode-shifting used in Behavioral Economics to describe the
and collaborative consumption, increasing safety, chasm between what we know we ought to do,
or reducing fare evasion in public transit systems. our perceptions of risk, and our actual behavior.
Information and education are not enough, and In the case of transportation safety, this gap can
attempts to harness the considerable benefits prove fatal.
available by evolving transportation behavior to
match the evolution apparent in transportation Traditional approaches to safety assume that
technology requires deep understanding of if people are educated on proper safety
how humans think and behave. Considering procedures, they will act rationally in accordance
these transportation trends in turn reveals a with their knowledge. In contrast, Behavioral
commonality—we often know better, but Economics approaches assume that human
persist in suboptimal decision-making. decision-making is often irrational and that our
use of heuristics can lead us to biased decisions.
The options for how people can move from An inspection of the research literature, and the
Point A to Point B are changing – ride sharing, inadequacy of a standalone educational approach,
public transit expansion, and active transit are make clear why educational safety interventions
increasingly viable options. New ways to get are limited in their ability to effectively drive safe
around, including electric bikes and scooters, behaviors. Scientific evidence on how humans
pooled taxi rides, and autonomous vehicles, are think, make decisions, and ultimately act, can help
becoming more readily accessible. Despite a us design interventions that can be tested in the
general awareness of such new opportunities, real world for their effectiveness.eectiveness.
four out of five Canadians still use private

34
Another pressing concern in the transportation can set up an antagonistic relationship between
sector today is how to offer sustainable solutions transit authorities and the public, and even
at scale. Well-functioning public transit requires though people know they could be punished, they
well-funded models. Collecting fares from behave against their best knowledge. Instead of
passengers stands as an important revenue focusing entirely on internal controls to manage
stream for maintaining alternative transport fare compliance, some transit authorities are
modes, but fare evasion is a growing concern in recognizing the merit in understanding fare
all smart and integrated public transit systems. evasion from the passenger perspective. Why and
The success of systems often depends on all under what circumstances do passengers choose
users cooperating and paying their fair share for not to pay their fare? Is it always a conscious
the service. Despite this obvious truth, and that choice? How can a better understanding of fare
most have the knowledge required to rationally evasion be used to increase fare compliance? In
choose to pay up, many shirk this responsibility, the following case study, we explore how testing
leading to losses in the billions worldwide. In the alternative approaches can reveal counterintuitive
past, the focus of research into fare evasion has results, and demonstrate the value of using
been on how to improve compliance by deploying approaches rooted in the science of human
fare compliance inspectors to minimize fare behavior in the transportation sector.
evasion rates. However, increasing enforcement

CASE STUDY
Reducing Fare Evasion with Behavioral Economics
The government of Santiago, Chile experienced a calamitous implementation of an integrated public
transit system in 2007. As a consequence, passengers became frustrated and took up “freeriding” in
response to the new system.

Discovery Behavioral Diagnostics

The growing number of individuals freeriding Instead of trying to deter users from evading,
allowed for fare evasion on transit systems to we reframed the challenge: how can we nudge
become socially accepted, contributing to a riders to cooperate? Broadly, we identified
whopping 28% rate of fare evasion (compared two categories of psychological barriers. The
to a 4.2% world average reported by Bonfanti first was associated with social forces, such as
and Wagenknecht based on 2007 data). Our diffusion of responsibility, tolerance to evasion
client tried traditional approaches to curtail as an acceptable social norm, and moral
fare evasion such as increasing enforcement, licensing manifested as resistance to authority.
installing turnstiles and barriers, and the The other category of barriers was situational,
creation of pre-paid zones. However, none such as people failing to plan accordingly to
of these approaches worked. have sufficient funds in their transit card, or
boarding through the wrong door due to time
and physical constraints.

35
 Ideation & Design Lab Choice Architecture
We developed, prioritized, and tested two We found a significant reduction in fare evasion
high-level strategic hypotheses aimed at (2.15%) when an additional fare payment machine
overcoming the two broad categories of was placed close to the back door (see Figure 4).
psychological and behavioral barriers. In contrast, we did not observe a significant effect
Our hypotheses were the following: in the driver engagement condition. Based on
these findings, we were able to draw a number of
• Humanizing the bus drivers through written useful conclusions about fare evasion and make
and oral engagement with the passengers concrete suggestions. Our results showed the
would decrease fare evasion by focusing the importance of increasing ease and convenience
social interaction on the individual (the bus for paying fares, and underscored the powerful
driver) and not the institution (public transit potential of relatively small changes to the choice
system). architecture. Even when stories and logic exist
that point to complex causal factors, such as
• Reducing the barriers to payment through social/political dynamics, sometimes simple
additional fare payment machines on buses situational factors are at the core of the problem.
would decrease fare evasion by improving While the social hypothesis was compelling,
the choice architecture of the environment and the strategy to humanize the drivers was
and giving more opportunities for fare innovative, a simple change to the choice
compliance. architecture (more fareboxes) was sufficient to
garner significant benefits. We calculated that
introducing additional fareboxes on buses could
Build & Experiment
help our client collect an additional $20 million
We conducted a randomized controlled trial US dollars in fare revenue.
(RCT) in the real-world context to test our two
hypotheses. To this end, we randomly assigned Those seeking to shift transportation modes,
eight buses across three conditions: increase safety, reduce fare evasion, or tackle
any of the other large-scale challenges posed by
• Driver engagement + farebox at the backdoor advances in transportation would be well served
to remember the utility of Behavioral Economics
• Farebox at the backdoor in driving positive change.

• No intervention (control) Probability of Evasion With

Respect To Control in Both Doors
The in-field RCT ran for nine days. We collected
more than 20,000 direct observations in the field 1.00%
from 144 bus trips. Having a control condition 0.00%
Base Evasion

ensures that we can evaluate the impact of our 0.04% 28,1% (Control)
-2.15%
-1.00%
interventions. Random assignment helped us
control for unforeseen events such as the driver’s -2.00%

personality, external conditions out of -3.00%

our control, and operational errors. ***
Farebox Farebox + Engagement
-4.00% N = 16,454

Reducing Fare Evasion in Santiago Through Increased Driver Engagement and Facilitating Payment
Figure 4 BetweenMeasure: How do each of the intervention conditions influence evasion rates vs control?
subjects conditions: Control (n= 974), Validator (n=1,352), Validator + Engagement (n=1,606)
Likelihood of fare evasion as a function of experimental condition.
Comparison is made to control condition (28.1% evasion).

Further Reading
Cools, M., Fabbro, Y., & Bellemans, T. (2018). Identification of the determinants of fare evasion. Case Studies on Transport
Policy, 6(3), 348–352.

Delbosc, A., & Currie, G. (2018). Why do people fare evade? A global shift in fare evasion research. Transport Reviews,
39(3), 376–391.

Lee, J., & Papas, D. (2015). All-door boarding in San Francisco, California. Transportation Research Record: Journal of the
Transportation Research Board, 2538(1), 65–75.

36
BE in Marketing
Humans are frequently irrational, yet marketers promoting and selling products and services often
assume otherwise. Typical marketing strategies assume that if consumers are provided with more
of the right type of information, and are made to feel like there is a compelling reason for them to
act (for instance, because there is a deal on offer), that they won’t delay and will take action. These
tactics all too often fail because they have been trumped by mental shortcuts that consumers rely
on to help them make decisions. For example, consumers disregard additional information about a
product in favor of doing what others do. In this case, social proof is an easier guide to action than
what might be gleaned from wading through new information. Or consumers fail to subscribe to
a new service, despite a compelling sign-up deal, because inertia and the status quo bias40 are
strong. All of this means that customers’ predictable irrationalities get in the way of sales instead
of being harnessed by organizations to drive customer behaviors.

In contrast to the known and predictable biases that drive human decision-making, the current retail
landscape is in flux. For example, it is marked by shifting consumer demands – consumers say they
want higher quality customer service, they expect that products and services will be more interactive
and personalized, and they increasingly go online to shop and consume media independently.41
Traditional marketing strategies assume two things: 1) that consumers know what they need, and
2) that there are many consumer “types” and diverse personas that need to be targeted in distinct
ways. This leads marketing departments to build strategies that may be less effective, and more
onerous than desired.

Key insights from Behavioral Economics are offering marketing teams a refresh around how they think
about consumers. These insights include that 1) consumer preferences are malleable, and can be
shaped by how information is presented,42 2) consumer preferences and intentions are frequently
a poor predictor of actual behaviors,43 3) consumer biases and features of the choice architecture
are more reliable predictors of consumer behavior, and 4) consumer biases are similar from person
to person.

Together, these insights challenge marketing teams to examine the assumptions driving their
strategies. Instead of building segment-specific or persona-driven strategies that prioritize customer
preferences, behavioral science recommends that marketing strategies leverage universal human
biases and see consumers as taking action based on the same set of heuristics. Marketing strategies
that are grounded in the science of decision-making and a rigorous testing approach that uses
experimentation are helping to improve the return on marketing investment.

BEworks applies a Behavioral Economics lens to dissect consumer decision-making against the
backdrop of trends and changes like the ones described so far. In this way, we use scientific thinking
to drive desired consumer outcomes. The first part of our method seeks to understand the factors
that drive decision-making and consumer behavior, and then we develop and test potential
interventions using best practices from behavioral science. An example of the BEworks Method
in action is detailed in the following case study.

37
 CASE STUDY
Brand Repositioning Using BE
Our client, a large US-based cosmetics company, had developed a groundbreaking multi-step
facial cleansing system that revolutionized how people approached skincare 50 years ago. Although
extensive resources were put into the research and development of this product, marketing efforts
for this product had fallen behind the curve. Nothing, from the packaging to the value proposition,
had changed significantly since the product’s inception.

Discovery Ideation & Design Lab

Over time, consumers had become more and We explored two interventions: value-
more disconnected from understanding the proposition messages and design of shelf
science and benefits behind the product, and displays. The rationale behind this was that
had started to perceive the product as being the value-proposition message needed to
gravely outdated. As a result, sales of the match its physical manifestation. Because the
product had begun to suffer. products were primarily sold in stores, the most
immediate physical manifestation of the value
Behavioral Diagnostics proposition was in the store shelf displays.
To this end, we generated a set of messages
Consumers faced several barriers on their around themes such as concretization, rhyming,
journey to purchasing the product. First, and whole-unit framing. We hypothesized that
consumers faced a problem with a lack of these behavioral principles would increase
knowledge about the product. For instance, consumers’ comprehension of the benefits of
although the products were designed to be the products (e.g., “the one kit that is custom-
used together, consumers were not aware of fit”). Concurrently, the shelf displays were
this and tended to use just one of the products redesigned to chunk information about the
in isolation. Compounded on top of this products - namely, chunking the products by
problem, messages and shelf displays in the product-type or by skin-type. We hypothesized
stores did not promote a clear understanding that by organizing the products in this manner,
of how the products were to be used. These this would further increase comprehension
comprehension issues cascaded into bigger about how the customer might navigate, find,
barriers, such as choice overload and fear and purchase the products.
of commitment, that ultimately impacted
purchase behavior.

38
Build & Experiment Choice Architecture
We put these different interventions to the The data revealed that when the importance of
test in an online experiment where over using all three products together was relatively
5,000 potential customers shopped in a high (which was boosted by a specific display
simulated store environment. Each customer type), purchase intent was 128% higher than
was randomly assigned a combination of when perceived importance was low (Figure 5).
message and shelf display, and reported their Confident in the proven effectiveness of their
intention to purchase the cleansing system new, psychologically informed marketing strategy,
(among questions about their perceptions and the company rolled out the new messaging.
comprehension about the products).

Figure 5
Purchase intention as a function of perceived importance
of using all products in combination.

Further Reading
Chernev, A., Böckenholt, U., & Goodman, J. (2015). Choice overload: A conceptual review and meta-analysis.
Journal of Consumer Psychology, 25(2), 333–358.

Dowling, K., Guhl, D., Klapper, D., Spann, M., Stich, L., & Yegoryan, N. (2019). Behavioral biases in marketing.
Available at SSRN 3091557

Simonson, I. (1989). Choice based on reasons: The case of attraction and compromise effects.
Journal of Consumer Research, 16, 158–174.

39
 BE in Healthcare
In the midst of an economy and society defined
by rapid technological change and increased CASE STUDY
interconnectedness, healthcare stands as a
sector of transformative innovation. With more Increasing rates of home
information at patients’ fingertips than they could
ever digest in a lifetime, it is no longer possible
dialysis selection for End
for medicine to remain the paternalistic, Stage Renal Disease patients
authority-led practice it has historically been.
Healthcare delivery is currently undergoing a In the USA, there are over 500,000 people on
paradigm shift towards patient-centricity, based life-sustaining dialysis treatment with End Stage
on a fundamental belief that healthcare should put Renal Disease (ESRD). Most of these people travel
patient needs and preferences at the forefront. to a dialysis clinic to receive their treatment. Every
Clinical trials now regularly solicit qualitative year, over 120,000 new patients initiate treatment
patient feedback in addition to measuring clinical on dialysis without receiving education on the
outcomes, many medical test results are now disease or the available treatment options.44
delivered directly to patients through online Home treatment options are proven to increase
portals, and healthcare practitioners have moved quality of life and likelihood of transplant, and
away from providing firm recommendations in reduce hospitalizations, compared to dialysis done
favor of providing information that empowers in clinics. Estimates suggest that over 50% of all
patients to make their own treatment decisions. patients could perform these treatments at home.
However, the implicit assumption in this model However, despite these advantages, 87% of patients
of patient empowerment is that patients will receive hemodialysis in a clinic rather than at home.
make good decisions if they have access to more
information. The study of Behavioral Economics Our client wanted to understand the psychological
reveals that this assumption is not always valid, reasons as to why a patient would select in-clinic
because it neglects the emotional, social, and dialysis even though the rational option for most
psychological factors that can lead to irrational people is home dialysis. Further, our client was
– and suboptimal - decision-making. interested in leveraging these insights to encourage
uptake of home dialysis.
Understanding the true drivers of medical
decision-making, including human biases Discovery
(e.g. information avoidance) and heuristics
(e.g. “if everyone else is doing it, I should too”), A series of semi-structured interviews with nurses,
is a critically important precursor to developing patients, caregivers, nephrologists, and industry
effective patient-centric solutions. Without an experts revealed stakeholder hypotheses about
understanding of how patients actually make why patients do not make optimal decisions about
decisions, we risk overwhelming them with dialysis treatment type. We discovered that most
information and increasing their reliance on stakeholders believe the challenge is psychological
poor decision-making criteria, like what is in nature, with patient decisions to get treatment
easiest to do in the moment or what they in the clinic being driven by fear or social pressure.
happen to read on Internet forums. Despite this hypothesis, current approaches
applied to the challenge have been purely
To gain a sense of how Behavioral Economics educational. While education is necessary as a
can be used to develop patient-centric solutions, foundation for making informed decisions, research
consider a recent case where BEworks worked has shown that it alone is unlikely to change patient
with a healthcare company entering the kidney decisions, and must be paired with other tactics.
dialysis market. Thus, we focused on how to effectively design and
disseminate education tools to promote informed
decision-making and sought to understand the
psychological, emotional, and social factors that
were hindering optimal patient decision-making.

40
Behavioral Diagnostics
Our model of the psychological journey outlines the precursors to selecting home dialysis, from
awareness to evaluation of options, to decision, and finally to action. To test the hypothesized drivers
of decision-making, BEworks designed and conducted a survey of over 900 kidney patients in
partnership with the National Kidney Foundation (NKF). The survey was designed to collect quantitative
and qualitative evidence to support or disprove our hypothesized barriers to choosing home dialysis.

The results of the survey were combined with the results of a scientific literature review to produce a
list of top barriers that were plotted along the psychological journey. (Figure 6). We hypothesized that
if the barriers at each step were overcome, patients would be able to make a less biased treatment
decision for themselves.

1 AWARENESS 2 EVALUATION 3 DECISION 4 ACTION

Whether and how patients Misconceptions, biases, and Even if in-home dialysis Follow-through on
learn about in-home perceptions of pros vs. cons is viewed favorably, the decisions is difficult
STEPS

dialysis affects their later determine how in-home decision to start and not always done
decision-making dialysis is evaluated may be postponed

• Misinformation • Fear of something • Outsourced control • Status quo bias

• Lack of information going wrong • Optimism bias • Emotional hot-state
BARRIERS

• Poor comprehension • Complexity

• Information avoidance • Fear of being a burden
• No support community
• Poor self-image
• Availability heuristic
• Comprehension of risk Figure 6
Psychological journey and barriers
to home dialysis selection
Ideation & Design Lab
The top three strategies to drive uptake of home therapy included an educational strategy employing
BE tactics, such as nudges and boosts, an emotional strategy that aimed to distance patients from their
fears, and a social strategy that aimed to reduce the perceived burden of home therapy on caregivers.
In collaboration with our client, we developed these strategies into a patient-centric face-to-face
nurse educator program. Nurses were trained to identify where patients are within their psychological
journey. Depending on the patient’s current stage in the journey, the nurses delivered one of five
interactive interventions and reminders to help the patient move past their psychological barriers and
onto the next stage.

This project is underway, and our team is currently working in the Build & Experiment phase
implementing an in-field experiment to test the prioritized strategies. The results from this test
will reveal the effect of our interventions on patient awareness, evaluation, decision-making, and
ultimately, action.

When it comes to understanding and influencing human behavior, there can be no substitute for a deep
knowledge of human psychology and the scientific method in the development and testing of patient-
centric solutions. Healthcare organizations that employ BE will have a significant competitive advantage
over firms that rely on the outdated assumption that investing in patient education alone will translate
into better patient outcomes.

Further Reading
Chan, C. T., Wallace, E., Golper, T. A., Rosner, M. H., Seshasai, R. K., Glickman, J. D., ... & Rocco, M. V. (2019). Exploring
barriers and potential solutions in home dialysis: An NKF-KDOQI conference outcomes report. American Journal of Kidney
Diseases, 73(3), 363-371.

Epstein, W. N. (2017). Nudging patient decision-making. Washington Law Review, 92, 1255.

McLaughlin, K., Manns, B., Mortis, G., Hons, R., & Taub, K. (2003). Why patients with ESRD do not select self-care dialysis as
a treatment option. American Journal of Kidney Diseases, 41(2), 380-385.
41
 BE in Education
In a fast-changing, competitive, and complex economy, the cultivation of knowledge, skill sets, and
capabilities attuned to global socioeconomic trends stands as an important priority. Educational
institutions are tasked not only with reimagining the sorts of offerings available to students, but
helping ensure that people make the most of the educational opportunities afforded them.

Higher education has long been lauded as a key means by which to improve outcomes for individuals,
the economy, and society, and more people than ever before are enrolling in post-secondary studies.
However, the data shows that many who begin college or university never finish,45 and those who
do finish often graduate with poor grades, and coincident weak knowledge and skills. This low
engagement and poor performance leaves students ill-equipped to contribute meaningfully in
the workforce, which in turn does little to sate the significant demand in the marketplace for
knowledgeable, skilled, competent talent.

Improving educational attainment requires a deep understanding of human psychology and behavior.
Behavioral Economics provides a scientifically grounded, evidence-based lens through which to view
and work towards solving these challenges. BE approaches can help distinguish effective pedagogical
strategies from intuitively appealing but ultimately ineffective approaches, can reveal the root causes
of why many students underperform, and help us craft new strategies to help individuals make the
most of their education and maximally contribute to society. Importantly, the scientific method
provides a clear means to test whether these new strategies lead to better outcomes.

Research to date has shown that, even when armed with insights from the science of human behavior,
improving student achievement is a difficult proposition. Phillip Oreopoulos and Uros Petronijevic
undertook an ambitious 5-year effort, which relied on a sample of over 25,000 students across
5 post-secondary institutions, to improve educational outcomes.46 They crafted a number of
behaviorally informed interventions, which included tactics to improve mindset, tactics to promote
goal setting, as well as text-based coaching, and even face-to-face coaching. Results showed that
none of the interventions significantly led to increases in attainment or persistence. While some
of the interventions managed to provide students with insight into the ways they fell short (e.g., not
studying enough), none led to better student outcomes.

At first glance, such an outcome might be seen as a failure of BE, but a deeper reflection reveals
the true utility of BE in this arena, and why superficial use of behavioral insights is no substitute for
deeper commitment to testing behaviorally informed strategies scientifically. In a setting absent a
BE orientation, it is feasible to expect that such well-intentioned and logical interventions might
garner significant support and be deployed at scale. Without empirical assessment of efficacy, these
interventions would not have been scrutinized and could have been widely adopted at great cost.
The education sector is no stranger to the widespread adoption of unsupported strategies. For
example, in 2017, 30 scholars from neuroscience, education, and psychology signed a letter to the
Guardian expressing their dismay at the continued use of “learning styles” – categorizing students
who self-reported being visual or auditory learners and tailoring teaching to their preferred style
– as a pedagogical approach, despite the abundance of scientific evidence that such an approach
(learning-style student matching) does not yield enhanced educational attainment.47 BE, and the
use of the scientific method, ensure that strategies are not uncritically used and ensure resources
are allocated appropriately in this high-priority pursuit to improve achievement.

Importantly, each experiment yields new insight into what should be tried next. BE approaches
provide mechanisms for continual learning and advancement toward strategies that actually work.
The dedication to rigorous methodology ensures that the evidence is context-dependent and we
can learn what works for whom, and under what conditions. Despite the ineffectiveness of the
abovementioned strategies, new approaches and experiments can be constructed that test similar
methods in new contexts, or inspire us to develop novel approaches to try again in the same context.
No scientific foray is a failure, as it provides new learnings that propel innovation.

42
CASE STUDY
Improving Attendance of Adult Learners
The post-secondary vocational training sector is of vital importance to both the economy and the
career outcomes of adult learners for whom traditional four-year college degree programs are not
an option. A key issue with these programs is high attrition.

A large Canadian career college that uses an Integrated Learning System to combine online
coursework with traditional classroom learning wanted to bolster attendance rates. The flexibility
afforded to students by this integrated learning approach appeals to adults who need to balance
school, work, and family with their desire for post-secondary training. However, it also means that
adult learners must continually balance the opportunity to enjoy career advancement with the time
and financial costs of attending class. To that end, we sought to deploy behavioral nudges aimed at
improving student attendance.

Discovery Ideation & Design Lab

We reviewed the scientific literature on To tackle these barriers, we designed an
vocational schooling and the overlap with other intervention that focused on the following
educational contexts. Additionally, we analyzed concepts:
the college’s historical data, interviewed key • Communicate with students to increase
stakeholders, and reviewed the college’s general their perception of being able to
structure. We discovered that attrition in post- successfully follow through with their goals
secondary education is a general concern; (addressing fragile self-confidence)
however, vocational students combat higher than
average attrition for both courses and programs. • Position their goals as supported by a social
network (targeting a perceived lack of social
support)
Behavioral Diagnostics
• Regularly remind students of their goals
We identified key barriers to habitual (mitigating present bias)
attendance for adult learners at the college.
Students received different messages weekly via
Major hypothesized barriers included fragile
email or text message over a 10-week period.
self-confidence, lack of social support, and
present bias.
Build & Experiment
Our communications intervention, branded
as the “Student Success Program,” was
deployed via RCT to over 600 adult learners.
These messages encouraged students to
pre-plan their schedules, engage socially with
classmates, and pre-commit to one-on-one
learning sessions.

43
 Choice Architecture
This intervention resulted in a 4.4% increase in weekly attendance rates for students receiving the
messages via SMS text and a 6.9% increase in weekly attendance rates among students receiving
the messages via email (see Figure 7). The low cost, low unsubscribe rate, and robust impact of
the Student Success Messaging campaign makes it a valuable and scalable way to improve adult
learner outcomes in post-secondary education settings. Increasing attendance rates by even just
a few percentage points can result in a substantial improvement in employment outcomes of adult
learners. Behaviorally informed strategies such as these have the potential to maintain the viability
of the for-profit education system in Canada.

Figure 7
Mean weekly attendance across messaging conditions.
Analysis was a regression in which number of days of attendance
per student per week are predicted by Group and Pilot Week.

Further Reading
Koch, A., Nafziger, J., & Nielsen, H. S. (2015). Behavioral economics of education. Journal of Economic Behavior &
Organization, 115, 3-17.

Lavecchia, A. M., Liu, H., & Oreopoulos, P. (2016). Behavioral economics of education: Progress and possibilities.
In Handbook of the Economics of Education (Vol. 5, pp. 1-74). Elsevier.

Rohrer, D. & Pashler, H. (2012). Learning styles: Where’s the evidence? Medical Education, 46, 630-635.

44
The Future of BE

45
 The Future of Behavioral Economics
By Nina Mažar, PhD
BEworks Co-Founder & Chief Scientific Advisor
Professor of Marketing and Co-director of the Susilo Institute for Ethics
in the Global Economy at Boston University Questrom School of Business
Behavioral Economics is undergoing an exciting with Interactive Voice Recording messaging (see
period of growth and recognition around the my Harvard Business Review write up about it,
globe. Nobel prizes have been awarded to published online July 26, 2018).48 Combined,
leaders in our field, and top academics are this increased spotlight in the public sphere
bringing Behavioral Economics to the masses and many successes toward understanding
through bestselling books and by making tangible and changing behavior in diverse domains,
improvements to the world (as I just did recently are spurring the demand for our expertise.
with the World Bank in DC) by advising and
collaborating with for-profit, non-profit, However, as a discipline we reflect upon our
multinational, and government organizations achievements, but it’s also important to reflect
to use behavioral insights to tackle pressing upon how we can unleash the full potential of
societal problems. Academics and practitioners, BE as we forge into the future. As we do so,
policy makers and decision makers, private and I believe a key element is the collaborative
public individuals are now leveraging behavioral and fulsome fusion of Behavioral Economics
approaches at an unprecedented scale. We are with complementary approaches and emerging
witnessing an increasing number of companies technology. Whether an organization adopts
and organizations drawing from Behavioral Behavioral Economics approaches into their
Economics to address both internal and external practice need not constitute a binary either-or
challenges. Internally, Behavioral Economics is decision. Many existing approaches can benefit
frequently being deployed to help employees from a more behaviorally informed lens, and
make better decisions and to build and retain Behavioral Economics can be complemented by
more diverse teams. Externally, in client and other approaches. Doing so can increase both
consumer-facing projects, firms are increasingly our impact and the complexity of the problems
using insights about human behavior and running we are able to tackle.
experiments to understand how consumers
make decisions and shift behavior. For example, For example, one must not simply choose
with one of our very own BEworks clients, we whether to deploy a nudge or a financial
took aim at reducing credit card delinquency incentive; deployed together, both types

46
of intervention may significantly contribute to particularly enticing affordance of fusing AI
behavior change. George Loewenstein and Nick and BE is the ability to deploy more customized
Chater (2017) provide thoughts on this issue behavior change initiatives. Behavioral
in a recent paper entitled, “Putting Nudges in Economics as it stands presently, primarily
Perspective,” in which they insightfully consider consists of developing and testing interventions
the strain between traditional and Behavioral to shift behavior toward a desired outcome,
Economics approaches.49 They argue that and then implementing the most effective
certain classes of problems typically seen as the solution for behavior change broadly across
domain of traditional economics may be best the target population in a uniform way. The next
addressed with behavioral solutions, and some generation of BE, imbued with AI, will allow
classes of problems thought to be behavioral in advanced prediction models that can attune
nature may best be solved through interventions interventions personally at the level of individuals
and incentives from traditional economic to maximize impact across the population.
approaches. Critically, they contend that hybrid In addition, the use of AI can help illuminate
approaches, those solutions which leverage less obvious aspects of psychological factors
the best of both traditional and Behavioral influencing behavior, which in turn can improve
Economics, will hold special promise in solving the innovative potential of our ideas. AI can help
many critical policy challenges (from inequality BE, but the benefits are mutual, as Behavioral
to climate change to employment), relative to Economics has the potential to facilitate
pure applications of either one alone. For the full our understanding of human-AI interactions,
potential of Behavioral Economics to be realized, including how AI is perceived and used by
a broader, flexible mindset, that allows for hybrid individuals and institutions, how it can most
approaches will be required. Incorporation of productively be used (Camerer, 2019), why
approaches from design, standard economics, some have “algorithm aversion” and how
psychology, and the broader social sciences, to overcome it, and factors related to bias,
should not be framed in either-or decision terms, fairness, trust, and morality in how AI is both
but rather seen as complementary pieces to programmed and deployed.50
the broader puzzle of how Behavioral Economics
can be used to solve big challenges. BE that embraces deeper integration and greater
immersion in collaborative and shared problem-
The future of Behavioral Economics does solving pursuits with other approaches, using
not just include collaborating with adjacent the most advanced technology of today, holds
traditions of research and application, it the key to some of the most critical questions
also entails interfacing with new fields that that companies, governments, non-profits and
are growing as a result of new technological societies at large are facing today. Behavioral
capabilities. As Artificial Intelligence (AI) has Economics has been illuminated in recent years
come to permeate nearly every aspect of as an indispensable tool, and the future will be
our daily lives and the world of industry, the even brighter as we explore these new frontiers.
imperative for Behavioral Economists is to Critically, not only will Behavioral Economics
connect practice to these trends, and to be better if practitioners become more
explore the new possibilities afforded through sophisticated in this sense; the collaborative
these technologies to increase its value. One parties, and the world, will be better too.

Further Reading
Camerer, C. F. (2019). Artificial intelligence and behavioral economics. In A. Agarwal, J. Gans, & A. Goldfarb (Eds.),
The economics of artificial intelligence: An agenda (pp. 587-608). University of Chicago Press.

Loewenstein, G., & Chater, N. (2017). Putting nudges in perspective. Behavioral Public Policy, 1(1), 26-53.

Mažar, N. (2018, July 26). How behavioral economics could help reduce credit card delinquency. Harvard Business Review.
Retrieved from https://hbr.org/2018/07/how-behavioral-economics-could-help-reduce-credit-card-delinquency.

47
 BE in Artificial Intelligence
Constant connectivity to the internet, machine between what people say they want and what
learning, deep learning, and artificial intelligence they are happy with differing across categories.
(AI), alongside other transformative technologies, In related work, BEworks’ Chief Science Officer,
are changing the way we live, work, and connect David Pizarro, along with Jim Everett and Molly
so dramatically that experts claim we are now Crockett, have argued that people distrust robots
entering the “Fourth Industrial Revolution”.51 Once to make moral decisions because robots are
solely the domain of the human mind, “thinking” percieved as calculative and make moral decisions
and “decision-making” are increasingly also being in a way unlike humans — with emotion and
done by machines. These trends have tremendous intuition interacting with objective reasoning.54
implications for how organizations interface with The way humans react to such technology is
consumers, as well as their employees. complex and domain-specific, and it is up to
organizations to determine where and how
Nearly everyone now has a “brain in their pocket” decision aids or decision makers should be
— a smartphone that can accomplish some of the made available to consumers.
tasks which used to require cognitive effort and
a human touch. Many consumer choices can now In terms of workers, there are industries that
be conveniently made through the smartphone. must prepare for major disruption and the mass
As a result, businesses now must determine which replacement of employees with technology.
choices consumers should make on their own, However, in many industries, technology will not
which choices businesses should help with, which take jobs, but will instead take tasks — human
choices should be automated completely, and intelligence will be augmented by artificial
how to attune interactions with consumers to intelligence and human decisions will be aided
reflect these preferences. or replaced by automated choices. In an article
published in Behavioral Scientist entitled,
New research from the UCLA Anderson School “Resistance is Futile: Embracing the Era of the
of Management has shown that although people Augmented Worker,” Nathaniel Barr (BEworks’
often think they would prefer to make a choice, Scientific Advisor) and Kelly Peters (CEO & Co-
consumer satisfaction can be higher when Founder) respectively, consider the psychological
choices are algorithmically assigned.52 This work challenges associated with the move to an
aligns with other research showing that people augmented workforce and increased reliance
have higher “algorithm appreciation” than we on decision aids.55 New skills and training will be
might assume.53 required in this era, and organizations will have to
rethink task distribution not just across a team of
The situation is complex, however, and varies humans, but across smart people and smart tools.
across products, with the degrees of disconnect

48
Trust is identified as a significant barrier to
technology adoption, with many — especially
The rise of smart technologies
those in jobs which require years of training —
reluctant to give over control to technology.
raises many issues about human
Indeed, the research cited above on “algorithm
appreciation” shows that this appreciation is
cognition and behavior that
lessened when people must pick between their
own judgment and an algorithm. We might be
business leaders must contend
willing to acknowledge that technology can with — both when it comes to their
outperform other people, but less willing to
cede our own expertise. A major challenge consumers and their employees.
going forward will be determining how to
help employees embrace the new advantages
Although the dynamics and challenges
afforded by decision aids available in the
associated with such technologies differ across
Fourth Industrial Revolution, and make the
consumers and employees, the solution remains
most of both minds and machines.
the same. While one might think that machines
doing more thinking for us would mean there
An issue that cuts across implementation of is less need to understand human thinking, the
AI in all realms is whether we can interpret opposite is true. The rise of smart technologies
the choices that algorithms make at all, and raises many new issues about human cognition
whether that matters. Deep learning is having and behavior that business leaders must contend
increasing presence in our lives in the form of with — both when it comes to their consumers
self-driving cars, loan assessment algorithms, and their employees. The most effective way
and medical diagnosis, among others. In each of to take on these new realities is to rely on BE.
these cases, AI is poised to make life-changing The scientific literature provides rich insights
decisions for the human user – whether it’s about how humans interact with and react to
in safety, wealth, or health. Because these advanced technology in their daily lives and
sophisticated algorithms work by self-updating at work, which can help guide organizational
internal computations to match the evidence they decision-making. Deploying the scientific method
encounter in the world, the resulting algorithm and rigorous testing allows organizations to test
can be beyond the comprehension of any human. new strategies and ways of working, and garner
This “black-box” problem — so-called because evidence about how best to proceed.
we can’t see under the hood of the AI — is having
regulatory consequences: in the EU, the European
In their Behavioral Scientist piece, Barr and
Commission is undertaking in-depth analysis of
Peters conclude by arguing that adapting to
algorithmic transparency and helping people
these technologies “isn’t a race to the finish,
better apprehend how AI makes choices that
but rather it’s an uncertain journey with
affect them.56 Such learnings are leading to
neither a roadmap nor prescribed end point…
new legislation, which raises new challenges to
We must continue to experiment, measure,
enforcement, and brings financial implications
and innovate.” As technologies that help us
measured in the billions. The new field of
make decisions, or even make decisions for us,
understanding complicated algorithms is called
continue to evolve, so too must the methods by
Explainable Artificial Intelligence, or XAI.57 Because
which businesses tackle challenges. Organizations
the central issue for XAI is whether humans
which embrace scientific approaches will yield
understand the decisions made, and how that
the biggest benefits in an era defined by rapid
understanding affects our usage and acceptance
technological advance, and a marketplace and
of AI, BE is poised to make an impact in the
workforce awash with automated decision aids
growing AI market that will define the Fourth
and decision makers.
Industrial Revolution.

Further Reading
Barr, N. & Peters, K. (2018). Resistance is futile: Embracing the era of the augmented worker. Behavioral Scientist.
Retrieved from https://behavioralscientist.org/resistance-futile-embracing-era-augmented-worker/.

Barr, N., Pennycook, G., Stolz, J.A., & Fugelsang, J.A. (2015). The brain in your pocket: Evidence that Smartphones
are used to supplant thinking. Computers in Human Behavior, 48, 473-480.

Everett, J., Pizarro D., Crockett, M. (2017, April 14). Why are we reluctant to trust robots? The Guardian. Retrieved from
https://www.theguardian.com/science/head-quarters/2017/apr/24/why-are-we-reluctant-to-trust-robots
49
 Evidence-Based Hiring: Finding the
Best Employees by Eliminating Bias

By Dhushan Thevarajah, MSc., MBA

BEworks Chief Operating Officer
We all know and accept that good hiring decisions Factors that should be irrelevant, such as
are critical for long-term business success. Yet gender,62 names and cultural interests,63,64
many companies continue to rely on antiquated sexual orientation,65 appearances,66,67 and even
and ineffective hiring methods for hiring their the weather68 can have a significant impact on
people, leading to millions of dollars in wasted candidate selection decisions. This means that
expenses each year from bad hires and untold there are opportunities and cost savings to be
underachievement from potentially missing the had by taking a less biased approach to hiring.
best people. An analysis of over 58,000 hourly
workers across 11 global companies calculated BEworks’ HireMetrics® platform was born out of
that avoiding a toxic worker (defined as someone our need to not fall victim to our own biases, but
who is overconfident, self-centered, or rather to develop a hiring process that is fairer,
Machiavellian) could save a company more than faster, and better. Here, we bridge our expertise
twice as much as bringing on a star performer in BE with data science to build a platform that
(defined as someone whose output equals efficiently filters out and selects candidates using
more than a single employee).58 This calculation, objective measures of their skills, abilities, and
however, is likely a gross underestimate as it does relevant values.
not include other costs, such as legal nightmares
and team morale.
BEworks’ HireMetrics® platform
Many traditional hiring methods rely on an
interviewer’s instincts and opinions of candidate was born out of our need to not
fit based on their resume, presentation,
communication style, and interview responses. fall victim to our own biases, but
This would be fine if candidate selection
processes were more structured and criteria less rather to develop a hiring process
ambiguous and subjective. However, the very
unstructured nature of most interview processes that is fairer, faster, and better.
makes them prone to bias59 and discrimination.60,61
50
The behavioral science field informs our platform in two important ways:

1. Inspired by Paul Meehl’s and Daniel Kahneman’s work on algorithmic decision-making,69 we

know that independent, specific, and objective tests are better predictors of performance than
subjective, holistic impressions. To complement this, the fields making up the behavioral sciences
(specifically psychology, Behavioral Economics, and organizational behavior) have developed a
number of these tests to measure personality, cognitive, and behavioral factors. These fields have
also developed rigorous criteria for development and validation of these tests, ensuring validity (the
test measures what it claims to measure), reliability (scores are consistent and stable over different
periods and environments), and fairness (the test is appropriate for all examinees irrespective of
race, religion, gender, or age).

To provide an example, let’s take the case of hiring for a salesperson – a role that BEworks is
currently helping companies solve through our HireMetrics® platform. When asked, most people
would consider a good salesperson to be extroverted. However, the research on sales performance
paints a more nuanced picture. We find that not all extroverts are created equal. Looking at the
subtraits of extroversion, being highly sociable is not predictive of sales performance, while high
potency (defined as someone who has influence, impact, and energy) is.70 Another important trait
is grit. High turnover is a rampant problem facing many sales teams – Duckworth’s work on grit has
shown that “grittier” sales representatives were more likely to remain on the job long-term.71 Both
potency and grit would be difficult to detect through standard interview questions. Instead, our
HireMetrics® platform uses both personality and behavioral tests to detect these traits. In the case
of selecting for high potency candidates, we developed a modified version of the Big 5 Personality
Test for sales roles that also corrects for candidate gaming. In the case of selecting for grit, we are
developing an online task that examines a candidate’s ability to achieve following an experience
of failure.

2. Behavioral science helps us understand the variety of biases present across the hiring journey, both
for the interviewer and interviewee, and provides a lens to solve for them. Some of these biases
include the following:

SOURCING SCREENING INTERVIEWING SELECTION

• Availability heuristic • Attribution error • Halo effect • Primary effect

• Schemas/stereotypes • Affinity bias • Affinity bias • Recency effect
• Esentialism • Similarity bias • Similarity bias • Conformity bias
• Representativeness • In-group bias • Projection bias • In-group bias
heuristic • Existence bias • Selective perception • Choice-supportive bias
• Signaling • Ambiguity effect • Affect heuristic • False consensus effect
• In-group bias • Outgroup homogeneity • Illusion of objectivity • Attribute substitution
• Halo effect • Status quo bias • Illusion of objectivity
• Representativeness
heuristic
• Illusion of objectivity

This list is not intended to be exhaustive or overwhelm you, but to simply show that each step of the
process can be influenced by a myriad of biases that we may not be aware of. For the interviewer, we
can solve for many of these biases through simply taking a more structured and algorithmic approach
as described earlier. We found that evaluating for certain skills, personalities, and behaviors can be
fully automated through better candidate screening tests. For other factors (e.g., handling a difficult
customer, defending a position, etc.), we can have interviewers play a more active and purposeful role
in the interview process by building out those realistic scenarios for interviewees to respond and react
to. Thus, we create real-time data points rather than relying on past experience, which we know is a
poor predictor of employee success.72

51
 For the interviewee, in addition to building a less biased hiring process based on the above, we can
(a) mitigate preexisting beliefs that might hinder a candidate (for example: adding “apply even if you do
not think you might meet all the specified qualifications” in a job description increases the number of
women applicants73), (b) anonymize and randomize where possible to reduce stereotype and ordering
effects, and (c) utilize tests that better control for differences across groups.

All of these debiasing processes are integrated into our HireMetrics® platform:

• Job Descriptions: increasing the diversity, and subsequently, volume of candidates applying for
the role by modifying the job description to reduce barriers for females and minority populations

• Screening: standardized screener survey that selects for candidates that meet thresholds for
personality, behavioral, and cognitive requirements, rather than relying on non-standardized
information coming from CVs and cover letters

• Work Samples: blind evaluations of work samples to evaluate and validate specific skill requirements

• Interviews: structured interviews using behavioral questions, work samples, and standardized
scales to asses the same personality and behavioral factors across candidates

• Panel Interviews: evaluate more subjective traits (e.g., culture fit) by panel of peers to provide a
normalized perspective on these factors

Behavioral science informs the objective inputs in the Behavioral science helps us
process, data science provides the speed, accuracy, and
scale to algorithmically convert these inputs into scores to understand the variety of biases
predict candidate success, and technology enables fluid
deployment of these improved methods in user- and present across the hiring journey,
organization-friendly ways. The data provided from each
candidate becomes a powerful feedback mechanism to both for the interviewer and
learn what factors are predictive and important, calibrate
interviewer inputs (for example: does John score poorer interviewee, and provides a
candidates higher than average?), and provide candidates
with meaningful feedback on go/no-go decisions. lens to solve for them.
In an era of increasing accountability for businesses, BEworks believes hiring the objectively
best candidates is not only good for business, but is also fundamental for corporate social
responsibility. HireMetrics® is a way for us and others to match the importance of who we
want to hire with how we hire.

Further Reading:

Grant, A.M. (2013, September 18). Goodbye to MBTI, the fad that won’t die. Psychology Today. Retrieved from https://www.
psychologytoday.com/ca/blog/give-and-take/201309/goodbye-mbti-the-fad-won-t-die

Housman, M., & Minor, D. (2015). Toxic workers. Harvard Business School Strategy Unit Working Paper, (16-057).

Meehl, P. E. (1954). Clinical versus statistical prediction: A theoretical analysis and a review of the evidence. University of
Minnesota Press.

Uhlmann, E. L., & Cohen, G. L. (2007). “I think it, therefore it’s true”: Effects of self-perceived objectivity on hiring
discrimination. Organizational Behavior and Human Decision Processes, 104(2), 207-223.

52
The Future of the Energy Sector
The history of human innovation has seen several the second largest share of greenhouse gas
industrial revolutions, all of which intersect with emissions, and approximately 63% comes
how we create and consume energy. First steam, from burning fossil fuels, mostly coal and
then electricity, then computing technology, have natural gas, according to the United States
fundamentally altered our ability to make the Environmental Protection Agency.74 In Canada,
most of the world’s resources. Today, as we make we have taken proactive steps, and the
our way into the Fourth Industrial Revolution, we electricity sector is the fourth largest source
see not a singular technology transforming how of emissions, accounting for approximately
we power the world, but many. Clean energy 10% of the total national emissions, according
systems, increasing reliance on digital and smart to Environment and Climate Change Canada.75
technologies for distribution, and important
changes to how consumers can produce and With so much at stake, the electricity industry
use energy based on a host of new possibilities has a duty to limit its carbon footprint and
enabled by technological advancement, are operate in an environmentally responsible way.
together transforming the energy sector. The province of Ontario, for example, is already
taking measures to reduce its carbon footprint.
Much as the human mind, and how people make It has closed its coal-fired generation plants
decisions and behave, were central to the onset and is moving towards cleaner, renewable energy
of this revolution, Behavioral Economics and sources, including wind and solar. This is also
psychological science are at the center of how beneficial from a financial standpoint given the
to make the most of our new reality. In order to predictions that the costs of solar continue to
understand the centrality of Behavioral Economics fall faster than for other sources.76
in the energy sector, it is important to consider
human behavior in the context of two key trends While large scale system shifts are an essential
that are driving the major changes in the energy part of reducing greenhouse gas emissions,
industry: decarbonization and decentralization. how consumers use energy at home is incredibly
important as well. Behavior change at the level of
Decarbonization the individual stands as an incredibly potent way
Climate change is humanity’s most urgent to generate cumulative positive impact toward
threat, and it is driven by rising greenhouse gas decarbonization, and BE is essential to creating
emissions—a large portion of which is a direct this important change. Everyday decisions, like
result of energy production and consumption. how to get to work, when to do the laundry,
In the US, electricity production makes up and how to ensure food isn’t wasted, all

53
 contribute to our collective energy footprint, also about their level of participation in energy
and in turn, influence the well-being of the production, the source of their energy supply,
planet. The scientific pursuit of understanding the different pricing plans available to them,
how people use energy, how they perceive and the way they should manage their energy
their energy use, and how to shift their behavior acquisition, consumption, and distribution.
to be more sustainable, requires leveraging In other words, consumers will turn into
available scientific literature, continued academic “prosumers”, and a broad new suite of decisions
research, and the empirical assessment of new and behaviors will be consequential in the energy
strategies in the field by BE practitioners. sector. Each of these decisions involves a host
of psychological factors and behavioral barriers,
Decentralization paving the way for BE to play an integral role
As the industry moves towards renewable in understanding and shaping these decisions
alternatives, the system is becoming increasingly and behaviors.
decentralized. In the past, the sector relied on
large power plants to distribute electricity, but Countdown to reinvention
now it is moving towards small plants and more Amid all of these major shifts, energy companies
local distributed energy resources with storage have no choice but to rethink their business
capabilities. models, develop new products and services, and
look for new ways to engage with their customers.
As the grid becomes more decentralized, They must actively shape customer choices in a
technology is needed to manage a new level of way that optimizes the experience.
complexity, and this has resulted in the rise of
digitalization in the power sector. Virtual power But it can be difficult for the energy companies to
plants are already replacing traditional ones and balance these major adjustments with mounting
interlinking small-scale solar and wind operations pressure to manage costs, grow earnings, and
with base load to create a reliable power system. satisfy public shareholders. Satisfying these
Advanced energy management software and economic and political constraints while adapting
control algorithms are emerging to keep grids the attitudes and behaviors of consumers requires
in balance and optimize the deployment of strategy as innovative as the technology causing
decentralized resources. At home, smart meters the disruption.
are already a reality. New players are entering the
field as a consequence of digitization, further Fueled by greener energy choices, new disruptive
diversifying the sector. entrants will give customers meaningful energy
usage insights and options regarding their homes,
The electrification of transport is also contributing businesses, and transportation choices. In the
to decentralization. Electrification of cars will future, people will have more choices than ever
change the power system forever, turning cars about how they get their power. With a growing
into moving energy storage devices which will be number of customers concerned with how and
used to take power from the grid or home and where their energy is generated, and how it
supply it back when it is needed. Latest forecasts impacts climate change, traditional models are
predict tremendous growth in the sales of electric bound to feel the heat.
vehicles (EVs): from 1.1 million sold worldwide in
2017 to a predicted 10 million in 2025 and then to Today, consumers are already capable of
a whopping 28 million in 2030. One of the drivers producing their own power, storing it by using
of this trend is that EVs are becoming cheaper to battery storage technology, and selling it
produce than internal combustion engine cars.77 back to the grid or to other consumers. Also,
consumers are already showing a desire for
With decentralization driving forward, not greater involvement and more innovation in their
only do we need to consider how consumers energy. They expect new energy management
make decisions about the use of energy, but products and services. They want more choices

54
when it comes to their rate plans and sources perceptions of fairness of electricity pricing,
of electricity. Additionally, they want to tap into driving customer endorsement of infrastructure
behind-the-meter solutions and local sources spending, improving customer comprehension
of generation to integrate electricity with other of electricity invoices and billing, driving
home services. participation in energy efficiency programs,
redesigning collection communications into
Human motivation, cognition, and behavior all behaviorally optimized notices and letters
will be essential to understand in this new era, that drive collection results, conducting
and the success of reinvention will in large part psychological audits of marketing campaigns to
be contingent upon the extent to which industry identify the barriers preventing customers from
leaders are responsive to the need for BE. taking advantage of energy incentives, leveraging
BE insights to encourage adoption of emerging
BE and the future of energy technologies, improving customers’ perception
The nature and scale of disruption in the of value by developing communications that
energy sector is complex, broad, and deep. bring electricity to life (taking a commodity that
Leaders in this sector must juggle emergent is typically invisible and taken for granted by
technological changes spanning from production most people and turning it into something that
to consumption, coincident shifts in consumer is “top of mind”), and an ambitious white paper
attitudes and behavior, and appreciation of the containing a strategic action plan on how to use
scientific evidence that climate change stands BE to build better customer choice architecture
as a significant threat. in the future for one of the largest energy
companies in the United States. Whether it be
BE can provide companies with crucial insights behavioral insights, large-scale RCT, or educating
into human psychology and behavior, as well as industry leaders on how energy trends connect
the opportunity to test disruptive concepts in a to human behavior, the demand for BE in this
controlled environment before rolling them out sector continues to grow.
more broadly. Our clients in the energy sector
are already leading the way in this regard, getting Our work demonstrates that behavioral tactics
ahead of the curve by applying a behavioral lens can ensure customer satisfaction and encourage
to their most intractable challenges and using greener choices, and shows that the future of
scientific evidence to execute disruptive growth energy is deeply interconnected with the science
strategies. We have worked with some of North of human behavior. Those that leverage research
America’s leading utility providers, regulators, into human psychology and behavior, and
and governments on diverse projects. Some of deploy the scientific method to test innovative
our successes include using behavioral tactics strategies, are poised to emerge as the brightest
to increase time-of-use compliance, shifting and most enduring players in the energy sector.
customers toward paperless billing, increasing

Further Reading:
Gazafroudi, A. S., Prieto-Castrillo, F., Pinto, T., & Corchado, J. M. (2018). Energy flexibility management in power
distribution systems: Decentralized approach. 2018 International Conference on Smart Energy Systems and
Technologies (SEST).

Olkkonen, L., Korjonen-Kuusipuro, K., & Grönberg, I. (2017). Redefining a stakeholder relation: Finnish energy
“prosumers” as co-producers. Environmental Innovation and Societal Transitions, 24, 57–66.

Webler, T., & Tuler, S. P. (2010). Getting the engineering right is not always enough: Researching the human dimensions
of the new energy technologies. Energy Policy, 38(6), 2690–2691.

55
 Glossary
Below are some of the most common terms that will help you on your journey to bring scientific thinking
to your organization.
15 common terms you should know:

Behavioral Economics (BE): Hypothesis:

The interdisciplinary study of the A proposed explanation of a phenomenon
psychological (cognitive, emotional, and made from limited evidence as a starting
social) mechanisms underlying the economic point for further investigation. To be testable,
decision-making of individuals and institutions hypotheses must be stated such that they
can be falsified or refuted
Behavioral Outcome:
An observable behavior that can be Intervention:
measured quantitatively, such as the A deliberate modification of a person’s
amount of money saved environment to change that person’s
behavior. However, these are vulnerable
Behavioral Science: to bias
The interdisciplinary study of human
behavior based on scientific methods Nudge:
A method of behavioral interventions that
Bias: directly or indirectly engineer a particular
A systematic error in the decisions behavioral outcome
and judgments that people make
Operational Definition:
Empirical Evidence: An explanation of a concept in ways that
Objective information gathered through are concrete and measurable. Operationally
observation used to support or refute a defining a concept (e.g., trust) is crucial in
scientific theory or hypothesis order to scientifically investigate that concept

Evidence-Based Decision Making: Randomized Controlled Trial (RCT):

Making decisions based on scientific A testing procedure in which the effectiveness
experimentation and empirical evidence, of new interventions is tested against a control
rather than relying on gut and intuition (no treatment) using a randomly sampled pool
of participants who are then randomly assigned
Experiment: to one of the conditions
A pilot run under highly specified conditions
to either gather data to test a hypothesis, Scientific Method:
or determine the efficacy of something A standardized and systematic way of
previously untried making observations, gathering data,
forming hypotheses, testing predictions,
Heuristic: and interpreting results
A simple, efficient rule of thumb
that people often use to form quick Scientific Thinker:
judgments and make decisions Someone who uses scientific methods to gain
and share understanding and knowledge

56
References
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prompt reduces credit card delinquency. Journal of Consumer Psychology, 28(3), 466-476.

2. Hummel, D., & Maedche, A. (2019). How effective is nudging? A quantitative review on the effect sizes and limits of
empirical nudging studies. Journal of Behavioral and Experimental Economics, 80, 47-58.

3. Frederick, S. (2005). Cognitive reflection and decision-making. Journal of Economic Perspectives, 19(4), 25-42.

4. Brañas-Garza, P., Kujal, P., & Lenkei, B. (2019). Cognitive Reflection Test: Whom, how, when. Journal of Behavioral and
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5. Tversky, A., & Kahneman, D. (1983). Extensional versus intuitive reasoning: The conjunction fallacy in probability judgment.
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6. Bettman, J. R., Luce, M. F., & Payne, J. W. (1998). Constructive consumer choice processes. Journal of Consumer
Research, 25(3), 187-217.

7. Simon, H. A. (1982). Models of bounded rationality. Cambridge, MA: MIT Press.

8. Evans, J. S. B. (2008). Dual-processing accounts of reasoning, judgment, and social cognition. Annual Review of
Psychology, 59, 255-278.

9. Evans, J. S. B., & Stanovich, K. E. (2013). Dual-process theories of higher cognition: Advancing the debate. Perspectives
on Psychological Science, 8(3), 223-241.

10. Kahneman, D. (2011). Thinking, fast and slow. New York, NY: Farrar, Strauss, Giroux.

11. Sloman, S. A. (1996). The empirical case for two systems of reasoning. Psychological Bulletin, 119(1), 3-22.

12. Stanovich, K. E., & West, R. F. (2000). Individual differences in reasoning: Implications for the rationality debate?.
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13. Ariely, D. (2010). Predictably irrational: The hidden forces that shape our decisions. New York: Harper.

14. Trémolière, B., & De Neys, W. (2014). When intuitions are helpful: Prior beliefs can support reasoning in the bat-and-ball
problem. Journal of Cognitive Psychology, 26(4), 486-490.

15. De Neys, W., Rossi, S., & Houdé, O. (2013). Bats, balls, and substitution sensitivity: Cognitive misers are no happy fools.
Psychonomic Bulletin & Review, 20(2), 269-273.

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17. Hertwig, R., & Gigerenzer, G. (1999). The ‘conjunction fallacy’ revisited: How intelligent inferences look like reasoning
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18. Cialdini, R. B. (2009). Influence: Science and practice (Vol. 4). Boston: Pearson education.

19. Cialdini, R. B., Demaine, L. J., Sagarin, B. J., Barrett, D. W., Rhoads, K., & Winter, P. L. (2006). Managing social norms
for persuasive impact. Social Influence, 1(1), 3-15.

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22. See, for example, Shu, L. L., Mažar, N., Gino, F., Ariely, D., & Bazerman, M. H. (2012). Signing at the beginning makes ethics
salient and decreases dishonest self-reports in comparison to signing at the end. Proceedings of the National Academy
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23. See, for example, Runco, M. A., & Jaeger, G. J. (2012). The standard definition of creativity. Creativity Research Journal,
24(1), 92-96.

24. See, for example, McGuire, W. J. (1997). Creative hypothesis generating in psychology: Some useful heuristics. Annual
Review of Psychology, 48(1), 1-30.

25. Akbaş, M., Ariely, D., Robalino, D. A., & Weber, M. (2016). How to help the poor to save a bit: Evidence from a field
experiment in Kenya. IZA Discussion Paper no. 10024.

26. Fernandes, D., Lynch, J. G., & Netemeyer, R. G. (2014). Financial literacy, financial education, and downstream financial
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28. Weisband, S., & Kiesler, S. (1996, April). Self disclosure on computer forms: Meta-analysis and implications. In Proceedings
of the SIGCHI Conference on Human factors in Computing Systems (p. 3-10). ACM.

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30. PwC. (2013). Energy transformation – The impact on the power sector business model. 13th PwC Annual Global Power &
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new.pdf

31. Faruqui, A., Sergici, S., Lessem, N., Mountain, D., Denton, F., Spencer, B., & King, C. (2013). Impact evaluation of Ontario’s
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evaluation_of_ontario’s_time-of-use_rates-first_year_analysis_faruqui_et_al_nov_26_2013.pdf

32. Faruqui, A., Sergici, S., Lessem, N., Mountain, D., Denton, F., Spencer, B., & King, C. (2016). Analysis of Ontario’s full
scale roll-out of TOU rates – final study. Retrieved from https://brattlefiles.blob.core.windows.net/files/6109_impact_
evaluation_of_ontario’s_time-of-use_rates-first_year_analysis_faruqui_et_al_nov_26_2013.pdf

33. Frederick, S., Loewenstein, G., & O’Donoghue, T. (2002). Time discounting and time preference: A critical review. Journal
of Economic Literature, 40, 351-401.

34. Grüne-Yanoff, T., & Hertwig, R. (2016). Nudge versus boost: How coherent are policy and theory?. Minds and Machines,
26(1-2), 149-183.

35. Statistics Canada. (2016). Data tables, 2016 Census. Retrieved from https://www12.statcan.gc.ca/census-
recensement/2016/dp-pd/dt-td/Rp-eng,fm?LANG=E&APATH=3&DETAIL=0&DIM=0&FL=A&FREE=0&GC=0&G
ID=0&GK=0&GRP=1&PID=110716&PRID=10&PTYPE=109445&S=0&SHOWALL=0&SUB=0&Temporal=2017&THEME-
=125&VID=0&VNAMEE=&VNAMEF=

36. Alta Planning and Behavioral Insights Team. (2018). Applying Behavioral Insights to Transportation Demand Management.
Retrieved from https://altaplanning.com/wp-content/uploads/Behavioural-Insights-to-Transportation-Demand-
Management_FINAL.pdf

37. World Health Organization. (2018, December 7). Road traffic injuries. Retrieved from https://www.who.int/news-room/
fact-sheets/detail/road-traffic-injuries

38. National Center for Statistics and Analysis. (2017, March). Distracted driving 2015. (Traffic Safety Facts Research Note.
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wp-content/uploads/2017/11/2016TrafficSafetyCultureIndexReport.pdf

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41. See, for example, Gladly. (2019). Customer service expectations report. Retrieved from https://cdn2.hubspot.net/
hubfs/2771217/2019%20Customer%20Expectations%20Reports/2019%20Customer%20Expectations%20Report.pdf

42. See, for example, Adjerid, I., Acquisti, A., & Loewenstein, G. (2014, June). Framing and the malleability of privacy choices.
In Proceedings of the 13th Workshop on the Economics of Information Security.

43. See, for example, Carrington, M. J., Neville, B. A., & Whitwell, G. J. (2014). Lost in translation: Exploring the ethical
consumer intention–behavior gap. Journal of Business Research, 67(1), 2759-2767.

44. Foley, R. N., Gilbertson, D. T., Murray, T., & Collins, A. J. (2011). Long interdialytic interval and mortality among patients
receiving hemodialysis. New England Journal of Medicine, 365(12), 1099-1107.

45. See, for example, Tinto, V. (2006). Research and practice of student retention: What next?. Journal of College Student
Retention: Research, Theory & Practice, 8(1), 1-19.

46. Oreopoulos, P., & Petronijevic, U. (2019). The remarkable unresponsiveness of college students to nudging and what we
can learn from it (No. w26059). National Bureau of Economic Research.

47. Hood, B., Howard-Jones, P., Laurillard, D., Bishop, D., Coffield, F., Frith, D. U., & Foulsham, T. (2017, March 12). No
evidence to back idea of learning styles. The Guardian. Retrieved from https://www.theguardian.com/education/2017/
mar/12/no-evidence-to-back-idea-of-learning-styles

48. Mažar, N. (2018, July 26). How behavioral economics could help reduce credit card delinquency. Harvard Business
Review. Retrieved from https://hbr.org/2018/07/how-behavioral-economics-could-help-reduce-credit-card-
delinquency

49. Loewenstein, G., & Chater, N. (2017). Putting nudges in perspective. Behavioral Public Policy, 1(1), 26-53.

50. See, for example, Camerer, C. (2018). Artificial intelligence and behavioral economics. in A. Agrawal, J. Gans, & A.
Goldfarb (Eds.), The economics of artificial intelligence: An agenda (p. 587-608). Chicago and London: The University
of Chicago Press.

51. See, for example, Maynard, A. D. (2015). Navigating the fourth industrial revolution. Nature Nanotechnology, 10(12),
1005-1006.

52. Demirdag, I., Shu, S., & Chen, M. K., (2018, November). Choice in the Digital Age. Poster presented at the Annual Meeting
of the Society for Judgment and Decision Making, Portland, OR.

53. Logg, J. M., Minson, J. A., & Moore, D. A. (2019). Algorithm appreciation: People prefer algorithmic to human judgment.
Organizational Behavior and Human Decision Processes, 151, 90-103.

54. Everett, J., Pizarro, D., & Crockett, M. (2017, April 24). Why are we reluctant to trust robots? The Guardian. Retrieved
from https://www.theguardian.com/science/head-quarters/2017/apr/24/why-are-we-reluctant-to-trust-robots

55. Barr, N., & Peters, K. (2018, January 8). Resistance is futile: Embracing the era of the augmented worker. Behavioral
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56. S
tengg, W. (2019, September 19). Algorithm awareness-building. European Commission. Retrieved from
https://ec.europa.eu/digital-single-market/en/algorithmic-awareness-building

57. See, for example, Gunning, D. (2017). Explainable artificial intelligence (xai). Defense Advanced Research Projects Agency
(DARPA), nd Web, 2.

58. Housman, M., & Minor, D. (2015). Toxic workers. Harvard Business School Strategy Unit Working Paper, (16-057). Retrieved
from http://www.hbs.edu/faculty/Publication% 20Files/16-057_d45c0b4f-fa19-49de-8f1b-4b12fe054fea.pdf.

59
 59. Florea, L., Valcea, S., Hamdani, M. R., & Dougherty, T. W. (2019). From first impressions to selection decisions: The role of
dispositional cognitive motivations in the employment interview. Personnel Review, 48(1), 249-272.

60. Snyder, M. L., Kleck, R. E., Strenta, A., & Mentzer, S. J. (1979). Avoidance of the handicapped: An attributional ambiguity
analysis. Journal of Personality and Social Psychology, 37(12), 2297-2306.

61. Uhlmann, E. L., & Cohen, G. L. (2007). “I think it, therefore it’s true”: Effects of self-perceived objectivity on hiring
discrimination. Organizational Behavior and Human Decision Processes, 104(2), 207-223.

62. Glick, P., Zion, C., & Nelson, C. (1988). What mediates sex discrimination in hiring decisions?. Journal of Personality and
Social Psychology, 55(2), 178-186.

63. Kang, S. K., DeCelles, K. A., Tilcsik, A., & Jun, S. (2016). Whitened resumes: Race and self-presentation in the labor
market. Administrative Science Quarterly, 61(3), 469-502.

64. Oreopoulos, P. (2011). Why do skilled immigrants struggle in the labor market? A field experiment with thirteen thousand
resumes. American Economic Journal: Economic Policy, 3(4), 148-71.

65. Ahmed, A. M., Andersson, L., & Hammarstedt, M. (2013). Are gay men and lesbians discriminated against in the hiring
process?. Southern Economic Journal, 79(3), 565-585.

66. Larkin, J. C., & Pines, H. A. (1979). No fat persons need apply: Experimental studies of the overweight stereotype and
hiring preference. Sociology of Work and Occupations, 6(3), 312-327.

67. Marlowe, C. M., Schneider, S. L., & Nelson, C. E. (1996). Gender and attractiveness biases in hiring decisions: Are more
experienced managers less biased?. Journal of Applied Psychology, 81(1), 11-21.

68. Redelmeier, D. A., & Baxter, S. D. (2009). Rainy weather and medical school admission interviews. CMAJ, 181(12), 933.

69. See, for example, Meehl, P. E. (1954). Clinical versus statistical prediction: A theoretical analysis and a review of the
evidence. Minneapolis, MN: University of Minnesota Press.

70. Vinchur, A. J., Schippmann, J. S., Switzer III, F. S., & Roth, P. L. (1998). A meta-analytic review of predictors of job
performance for salespeople. Journal of Applied Psychology, 83(4), 586-597.

71. Eskreis-Winkler, L., Duckworth, A. L., Shulman, E. P., & Beal, S. (2014). The grit effect: Predicting retention in the military,
the workplace, school and marriage. Frontiers in Psychology, 5, 36.

72. Van Iddekinge, C. H., Arnold, J. D., Frieder, R. E., & Roth, P. L. A meta-analysis of the criterion-related validity of prehire
work experience. Personnel Psychology, 72(4), 571-598.

73. Mohr, S.M. (2014). Why women don’t apply for jobs unless they are 100% qualified: Harvard Business Review. Retrieved
from https://hbr.org/2014/08/why-women-dont-apply-for-jobs-unless-theyre-100-qualified

74. United States Environmental Protection Agency. (2019). Sources of greenhouse gas emissions. Retrieved from https://
www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions

75. Environment and Climate Change Canada. (2019). Canadian environmental sustainability indicators: Greenhouse gas
emissions. Retrieved from www.canada.ca/en/environment-climate-change/services/environmentalindicators/
greenhouse-gas-emissions.html.

76. US Energy Information Administration. (2019). Annual energy outlook 2019 with projections to 2050. Retrieved from
https://www.eia.gov/outlooks/aeo/pdf/aeo2019.pdf

77. Bloomberg NEF. (2019). Electric Vehicle Outlook 2019. Retrieved from https://about.bnef.com/electric-vehicle-outlook/

60
 BEworks
Around the World

BEworks offers services all over the world.

We have offices located in:

Headquarters Office
Toronto, Canada

New York City, USA

Bogotá, Colombia

Tokyo, Japan

Nairobi, Kenya
61
BEworks Leadership and Science Team
Our team offers unparalleled expertise in behavioral science. To ensure that we are providing our
clients with top-shelf, cutting-edge research to drive innovation, all of our consultants have earned
advanced degrees in cognitive psychology, social psychology, neuroscience, finance, consumer
behavior, and marketing. Our business, operations, marketing, and growth teams are also comprised
of dedicated professionals with a passion for science.

Dan Ariely Nina Mažar

Kelly Peters
MBA
PhD PhD
Co-Founder & CEO Co-Founder & Chief Co-Founder & Chief
Behavioral Scientist Scientific Advisor

David Lewis Dhushan Thevarajah

Wardah Malik
PhD, MBA, CFA MSc, MBA
VP, Digital & Marketing
Chief Client Officer Chief Operating Officer

Michelle Hilscher
David Pizarro Nathaniel Barr
PhD
PhD PhD
Director, Discovery &
Chief Science Officer Scientific Advisor
Behavioral Diagnostics

Jennifer Weeks David Thomson

Ada Le
PhD PhD
PhD
Director, Ideation Director, Experimentation
Senior Associate
& Design Lab & Choice Architecture

Shannon O’Malley Juan Salcedo

Kazunaga Matsuki
PhD PhD
PhD
Senior Associate, Academic Practice & Growth
Partnership & BE Lab Regional Director, Japan Lead, LATAM

Andrew Abela Angela Cooper Eriko Matsuki

PhD PhD PhD
Associate Associate Associate

Erick Roat Jeremy Gretton Mark Morrissey

PhD PhD PhD
Associate Associate Associate

Olga Rodríguez
Matthew Kan Pierre-Jean Malé
Sierra
PhD PhD
PhD
Associate Associate
Associate

Rebecca Judges Sarah Carpentier Shelbie Sutherland

PhD PhD PhD
Associate Associate Associate

Jesse van Patter Chaim Kuhnreich

Matthew O’Brien
MSc PhD Candidate
Data Analyst
Data Analyst Research Analyst

And more...
The Science of Behavior:
Workshops by Academy
When making strategic decisions, it is vital to understand human behavior
and what influences it.

Explore how Behavioral Science can improve corporate decision-making.

Learn more about: Audience Customizations:

• Using Behavioral Science to • Management Workshops
optimize strategy, operations
and marketing initiatives • Team Workshops

• How people make decisions • Customer & Client

and cutting-edge ways to apply Focused Workshops
decision-making science • Executive Coaching
• Helping people maximize health,
wealth and happiness with the
science of Behavioral Economics

For a no obligation consultation or to book a workshop built for your

specific needs, contact us at:
E: [email protected]
T: +1 (866) 751-4972
www.BEworks.com

Academy
BEworks Academy is a learning institution designed by BEworks industry leaders to teach organizations the
applicable foundations of Behavioral Science.

' BEworks " BEworks ! BEworksInc $ BEworksInc

 Transforming your organization
with Behavioral Economics
Finding a BEworks Engagement That is Right for You

Do you need to solve a

specific business challenge?

BEworks Consulting Method

Discovery Solutions

Do you want us to deep dive on

a specific topic with a BE lens?

BE Insights

Do you want to learn more about BE?

BEworks Academy

Do you want to embed BE into

Training and Certification
your organization and culture?

Build a Behavioral Change Unit

(Organizational Design)

BEworks HireMetrics®

TACKLE BIG CHALLENGES TRANSFORM THE ORGANIZATION

The BEworks Consulting Method BEworks Academy
Our team of scientists works with you to understand Workshops: Learning sessions where you are taught the applicable
your challenge and work through the proprietary foundations of Behavioral Economics. Topics include financial
BEworks Method to provide innovative solutions that decision-making, risk, marketing, sustainability, compliance, and
are science-based, effective, and actionable human resources
Training & Certification: An EMBA-style certification program
BE Insights that takes learners through a comprehensive set of modules
Behavioral Audit: We audit an existing service or designed to enable students to apply it on their own following
product to identify key sticking points and make course completion
hypothesized recommendations on where barriers
might exist. This is a precursor to developing solutions BE Institute
Build a Behavioral Change Unit: We can help you create a Behavioral
Behavioral Diagnostics: A report that contains the Change team within an organization. Our process starts by identifying
most up-to-date scientific research to provide a where the organization’s existing scientific knowledge and capabilities
rich understanding of your challenge are, assesses the gaps, and then offers the People, Process, and
Technological frameworks required to transform your organization
How do you know? Reliable & Valid Measures: We
help organizations take vague measures and make BE Platforms
them operational to ensure impact is measurable HireMetrics®: A proprietary software designed using behavioral
insights to ensure unbiased and diverse hiring

Collections: Our proprietary collections communications and

processes yield improvements in accounts receivables outcomes

Contact us at [email protected] | 416.920.1921

Bringing BE to Your Organization
BEworks Executive Working Session
Let us help you and your team identify a strong
opportunity to apply BE at your organization.

Organizations are excited about the potential of BE, but aren’t quite sure how and
where to start. We work with leading organizations to embed Behavioral Economics
into their biggest challenges.

Let us help you get the insight and clarity needed to align your challenges to
behavioral objectives, create leadership buy-in, and identify impactful projects
that can help bring BE to life within your organization.

Purpose of the BEworks

Executive Working Session
The BEworks Executive Working Session will help you:

1 Introduce Behavioral 2 Identify big impact opportunities

Economics to key decision- to apply BE in 2020
makers in your organization

The output of this interactive session is a list of actionable BE projects and

opportunities to be prioritized with your team.
The aim is to help your organization approach challenges in 2020 with a fresh
lens grounded in the science of human behavior.

Sign up today at
BEworks.com/executive-working-session
Save the date for Summit 2020
October 5th & 6th
Location: Toronto

50% OFF
Use promo code “EarlyBird” to save over 50% on your ticket.
Exclusive savings just for you.
Promo code valid until February 29, 2020.

Summit 2020 sponsorships are available!

If you are interested in sponsoring the summit and getting insider
access to the event, email: [email protected]

This year’s speakers include:

Dan Ariely Cass Sunstein Michael Norton

PhD JD PhD

Kelly Peters Nina Mažar David Pizarro

MBA PhD PhD

Dilip Soman Paul Bloom On Amir

PhD, MBA PhD PhD

Past speakers have included:

Thomas Gilovich George Loewenstein Jenna Clark

PhD PhD PhD
Nicole Robitallie June Cotte Derek Koehler
PhD PhD PhD
 Acknowledgements
The first BEworks Choice Architecture Report was made possible by the effort and dedication
of Michelle Hilscher, Jennifer Weeks, and David Thomson, in addition to the whole BEworks team.
A special thanks to our chief editors Nathaniel Barr and Olga Rodríguez Sierra for their relentless
effort in making this happen, despite juggling many other commitments; our witty copy editor
Jeremy Gretton for his eagle-eyed attention; Bartłomiej Piekarski for his thoughtful feedback;
and our talented graphic designers Alexandra Panova and Sara Barr.
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