Behavioural Economics and the Human Brain

Over the past ten years, the author of this Issues Note and his many co-authors and colleagues with Delsys Research and other organizations have been conducting research and consulting studies on whether, why, and how behavioral economics, neuroeconomics, and other less conventional economics literatures can be applied to improve the design, administration, enforcement and performance of competition, consumer protection, product safety, environmental, and other policies, laws and regulations of government.

This blog provides a brief overview of the work we have completed over the past decade in this area. The attached Issues Note, “Regulation, Governance, Behavioural Economics and the Human Brain,” explores the insights we gained from this work in greater detail. A previous Issues Note I co-authored with Eric Milligan reviewed the work that we conducted for the Office of Consumers Affairs, Industry Canada, and other organizations on Behavioural Economics and the consumer.

One of the major conclusions of our research is that System Dynamics or other conceptual frameworks are needed to fully grasp the complexity of the human brain and the growing complexity of regulatory regimes.

In 2011, Eric Milligan and I co-authored two studies for the Red Tape Reduction Commission on: (i) improvements to the professional orientation and service delivery of regulatory agency functions and internal processes; and (ii) the reduction of cumulative burden and asymmetric regulation within regulatory functions. These studies explored ways to reduce various regulatory burdens, such as administrative and compliance costs, as well as other frustrations and irritants for regulated entities. These studies also discussed ways that regulators can influence the perspectives, attitudes, incentives, and motivations of regulated entities to increase regulatory compliance.

In 2011 and 2012, I worked with Eric Milligan and two other colleagues on two chapters of “How Ottawa Spends,” an annual publication released by Carleton University. These two chapters applied recent insights from Behavioural Economics, Industrial Organization and related literatures in order to address the challenges faced by governments and their regulatory authorities. One chapter discussed challenges related to regulatory budget cuts, while the other explored how the challenges that regulators face vary at different stages of their development.

In recent years, Dr. Ireland prepared working papers and presentations for the Annual Conferences of the Canadian Law and Economics Association (CLEA) in Toronto and the Canadian Economics Association in Vancouver. These papers and presentations addressed the following topics: “Behavioural Economics and Competition Policy and Law in Emerging Market Economies”, “Is Behavioural Economics Ready for Competition Policy and Law and Related Market Regulation? Or Should We Reverse the Question?” and “The Regulatory Paradox: So Much Affirmative Evidence and So Many Negative Incidents; What are Regulators To Do?”

In addition, I have maintained a compendium of insights developed in the behavioural, neuroscientific, and related literatures. The compendium defines each insight and provides examples of how it is used in the literature, noting the many links and interactions between different biases and heuristics. In preparing the compendium, I emphasized biases and other attributes that are relevant to consumers, companies, regulators as well as other market participants and regulatory actors.

Click here to Download the Regulation_Governance_Behavioural_Eco_and_Human_Brain Issues Note.

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