Rotman Management – April 2019

rotmanmagazine.ca / 7

WHILE THEY GO ABOUT THINGS in very different ways, at their core,
every organization is actually in the same business: behaviour
change. Whether it is a for-profit firm encouraging consumers to
switch to its product; a government agency trying to get citizens
to pay taxes on time; or a health agency interested in improving
the consumption of medication, behaviour-change challenges
abound.
Many organizations struggle to make behaviour change
happen due to a fundamental empathy gap. ‘Econs’ — as depict-
ed in Economics textbooks — are hypothetical individuals who
have well-defined preferences, are able to accurately predict the
future consequences of their actions, have immense compu-
tational abilities and are unfazed by emotion. Humans, on the
other hand, are cognitively lazy, impulsive, emotional and com-
putationally constrained. The empathy gap occurs when orga-
nizations design products and services for econs, when in fact,
the end-user is a typical human being.
Not surprisingly, the day-to-day behaviour of humans differs

significantly from that of econs. Factors including context, cogni-

tive laziness, procrastination and social pressure play key roles in

human decision-making. The emerging field of Behavioural In-

sights works to connect the psychology of human behaviour with

economic decision-making to explain these phenomena.

Over the past 10 years, we have seen a great deal of progress

in the application of behavioural insights (‘BI’). With thousands

of trials being run by hundreds of public and private-sector orga-

nizations around the world, human behaviour has become a key

focus of activity in the policy, welfare and business world.

Inspired by the growing interest in BI from all sectors—

as well the absence of any formal guidelines for embedding

them within an organization — Behavioural Economics in

Action at Rotman (BEAR) has published a ‘playbook’ to help

interested leaders navigate the realm of BI. In this article we

will summarize its key messages, beginning with a description

of the four roles that BI can play to create value for virtually

every organization.

A Playbook for Organizations

Some of the smartest organizations are moving

behavioural insights up the value chain and embedding

them into their everyday processes.

by Bing Feng, Jima Oyunsuren, Mykyta Tymko, Melanie Kim and Dilip Soman