Behavioral Finance Symposium Summary Paper

University of Michigan Center on Finance, Law, and Policy: Behavioral Finance Symposium. September 14-15, 2017. Ann Arbor, Michigan

39 Pages Posted: 17 May 2018 Last revised: 19 Jun 2018

See all articles by Michael S. Barr

Michael S. Barr

University of Michigan Law School; University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy; University of Michigan, Center on Finance, Law, and Policy

Annabel Jouard

University of Michigan, Center on Finance, Law, and Policy

Andrew Norwich

University of Michigan, Center on Finance, Law, and Policy

Josh Wright

ideas42

Katy Davis

ideas42

Date Written: May 16, 2018

Abstract

In September of 2017, the University of Michigan’s Center on Finance, Law and Policy and behavioral science research and design lab ideas42 hosted a two-day symposium on behavioral finance. Behavioral finance is the study of how behavioral biases and tendencies affect financial decisions, and in turn how those impact financial markets. A number of leaders from academia, government, nonprofits and the financial sector discussed behaviorally influenced research and innovations in financial products and services, and the impact of those innovations on the entire financial system. Through keynote presentations, panel discussions, Q&A, and interactive audience experiments, participants also discussed how policy designers could incorporate the principles of behavioral finance into their decision-making.

This summary paper is divided into two parts. Part I defines behavioral finance, explores how behaviorally minded economists and others seek to depart from assumptions that have traditionally played an important role in modeling human behavior, and discusses the underlying policy debate surrounding the use of “nudges.” Part II builds upon this understanding by analyzing: consumers’ and small businesses’ financial well-being; the innovative “nudges” and experiments undertaken by symposium speakers and the organizations they represent; the limits, unintended consequences, and externalities that have arisen from innovation in behavioral finance; and the ways in which these small nudges have ripple effects throughout the entire financial system, affecting macroeconomic financial stability.

Keywords: Behavioral finance, Behavioral economics, Narrative economics, Public policy, Interdisciplinary research, Audience experiments, Psychological bias, Finance, Small business innovation, Fintech, Macroeconomics

JEL Classification: E, K

Suggested Citation

Barr, Michael S. and Jouard, Annabel and Norwich, Andrew D. and Wright, Josh and Davis, Katy, Behavioral Finance Symposium Summary Paper (May 16, 2018). University of Michigan Center on Finance, Law, and Policy: Behavioral Finance Symposium. September 14-15, 2017. Ann Arbor, Michigan. Available at SSRN: https://ssrn.com/abstract=3179786

Michael S. Barr (Contact Author)

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
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University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy ( email )

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Ann Arbor, MI 48109
United States

University of Michigan, Center on Finance, Law, and Policy ( email )

735 S. State Street, Suite 5211
Ann Arbor, MI 48109
United States

Annabel Jouard

University of Michigan, Center on Finance, Law, and Policy ( email )

735 S. State Street, Suite 5211
Ann Arbor, MI 48109
United States

Andrew D. Norwich

University of Michigan, Center on Finance, Law, and Policy ( email )

735 S. State Street, Suite 5211
Ann Arbor, MI 48109
United States

Josh Wright

ideas42 ( email )

80 Broad Street
Suite 3000
New York, NY 10004
United States

Katy Davis

ideas42 ( email )

80 Broad Street
Suite 3000
New York, NY 10004
United States

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