ECON E- 1034: Consumer Behavior Syllabus - Fall 2014

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1 ECON E- 1034: Consumer Behavior Syllabus - Fall 2014 Have you ever wondered why you re so reluctant to order the same entrée as your dining partner? Or why you d brave a blizzard to attend a show you weren t really that excited about just because you already paid for the tickets? This course is designed to introduce students to the evolving field of consumer behavior. We explore people s behavior across a number of domains from the cognitive biases that impact our daily decisions, to the ways in which we re influenced by our peers, to the nudges governments can enact to shape our behavior. This course draws from research in behavioral economics, social psychology, and academic marketing, and is intended to broadly survey the field of consumer behavior. Our primary hope is that this course can be fun like a great dinner party conversation that lasts for 14 full weeks. Because we re studying human behavior, we should all have a lot to contribute, both from our own personal experiences, as well as from the content of the materials we ll be reading each week. We ll be using a mix of texts both academic papers and mainstream book chapters but we presume no incoming knowledge of psychology or academic research whatsoever. We ll start from scratch teach you the basics of reading a scientific paper, give you the tools to become a discerning reader of social science research, and hopefully give you a whole new perspective for thinking about the wild ways we civilized humans behave. Instructors This course will be co- taught by four doctoral students from the Marketing Unit at Harvard Business School, all of whom are currently doing research on consumer behavior. Two instructors will co- teach each week s session. If you have questions about a specific topic or session, you may address them to the instructors leading that particular course; any broader questions or concerns about the class may be directed to Kate Barasz. Kate Barasz (lead instructor) Fifth- Year Doctoral Student, Marketing kbarasz@hbs.edu Grant Donnelly Second- Year Doctoral Student, Marketing gdonnelly@hbs.edu Tami Kim Third- Year Doctoral Student, Marketing tkim@hbs.edu Bhavya Mohan Fifth- Year Doctoral Student, Marketing bmohan@hbs.edu

2 Course Materials This course will use materials from a range of different sources, including popular press books, academic papers, and news articles. Every week, students will be assigned at least one book chapter and one academic paper, with other required material added as appropriate. For the academic papers, we do not expect any level of technical expertise whatsoever don t fret if you know nothing about statistics! We just want to expose students to the methods currently being used to investigate questions concerning consumer behavior. Required Books (other readings will be posted on isites): Nudge: Improving Decisions about Health, Wealth, and Happiness. Richard Thaler and Cass Sunstein (2009) Predictably Irrational: The Hidden Forces That Shape Our Decisions. Dan Ariely (2010) Assignments and Grades Participation The success of our course depends on active and lively discussion among both the students and instructors. Therefore, all students are expected to meaningfully participate in each and every session and demonstrate that they have thoroughly read all of the assigned material. A good rule of thumb is to participate at least once per class meeting. Other opportunities for participation will include in- class activities and online surveys. Participation will be tracked and we will provide you with mid- semester feedback. [20% of grade] Note: Because we plan to tailor our readings to the interests of the class as well as draw on current topics that appear in the popular press readings will not be finalized until 12:00PM on the Tuesday prior to class. As with the response prompts, they will be posted on isites. Weekly Responses Students will write weekly responses. Prompts will be posted on isites by 12:00PM the Tuesday prior to class. Responses should be one- page in length (and may be shorter, as long as the content is strong); they will be graded based on thoughtfulness and originality of content. These responses may include (but not be limited to) reflections about your own topic- relevant experiences, brainstorming new questions or experiment ideas, or commenting on things that are happening in the popular press. These writing exercises are meant to be fun and creative, and also to build toward the final project. We ask that you submit them via isites by 5:00PM on the Sunday before class so that they can be read and incorporated into the discussion. Late assignments will not be accepted. [25% of grade]

3 INDIVIDUAL PROJECTS Throughout this course, we d like you to come up with a topic that you re particularly interested in, and eventually turn that into a research question. These should be personally relevant or meaningful or interesting in some way pick something you re passionate about and want to discover the answer to. Some sample questions might include: How does mental accounting affect our spending and saving habits? How can we leverage the power of social influence to change donation rates? How can we use price to signal quality? How can we harness variety- seeking tendencies to get people to purchase more? Throughout the course as you read and observe the world around you you should be thinking about what sparks your interest. Working with your appointed instructor, we ll help you narrow down the question and point you in the right direction. The individual project will have two graded components: Midterm Project Proposal Due October 26 at 5:00PM. This should be a 2-3 page write up of your intended final project topic. It should clearly outline the question you hope to answer, how you might think about testing it, and what implications you think it might have. Tell us why you care about it, and why you think it should be studied. We ll give you feedback that should help you prepare for the final project. [25% of grade] Final Project The last two class sessions (December 8 and 15) will be dedicated to student presentations. We will divide the class in half (and have two separate meeting places), such that you will only present to (and watch) 20 student presentations or 10 during each class meeting. Presentations will be 8-10 minutes long (including discussion) and will include: an overview of your idea or question, how it affects people s behavior, how this question might be informed by other, how you would test this question experimentally, and what the implications might be. The exercise is meant to get you thinking about your own questions or how the different topics from our course might apply in real- life contexts you face and spur conversation among your classmates. It is mandatory that you attend BOTH sessions, even if you are not presenting. A more detailed grading rubric and presentation criteria will be provided later in the semester. [30% of grade] Week 1: Introduction to Consumer Behavior Instructors: Kate, Tami, Bhavya, and Grant Introductions (instructors and students) What are experiments? Approach to reading academic articles Intro to social psychology and behavioral economics

4 Readings: Nudge: Introduction Predictably Irrational: Introduction Weekly Response Prompt: A brief introduction about yourself, including the reasons you re taking this course and any specific topics you d like to cover. (Please to instructors by 5:00PM on Sunday, September 7: kbarasz@hbs.edu) Bounded rationality Reference points Framing Anchoring and adjustment Week 2: Heuristics and Biases Instructors: Tami and Kate Motivation to attain goals Behavioral change Week 3: Goal Setting and Self- Control Instructors: Grant and Kate Week 4: Financial Decision Making Instructors: Grant and Bhavya Introduction to financial- decision making Decision- making influenced by mental accounts and Questions The nature of preferences Context effects Week 5: Preferences and Choice Instructors: Kate and Bhavya

5 Variety seeking Week 6: The Psychology of Price Instructors: Bhavya and Kate Placebo effects of price The allure of free The endowment effect Happiness Spending for Happiness Spending on Others Week 7: Prosocial Behavior and Happiness Instructors: Grant and Tami Collectible experiences Co- creation of value Age and experiential consumption Week 8: Experiential Consumption Instructors: Tami and Grant Week 9: Social Influence Instructors: Kate and Grant and Questions Social norms Persuasion and social influence Foot- in- the- door versus door- in- the- face tactics Time discounting Anticipation Week 10: Habits and Intertemporal Choice Instructors: Tami and Bhavya

6 Sequences of preferences Week 11: Consumer Behavior and Health Instructors: Bhavya and Grant Defaults and medical decision- making Overconsumption and behavioral nudges in plate and portion size Libertarian paternalism Bad nudges Course summary Week 12: Policy and Firm Applications Instructors: Bhavya and Grant Week 13-14: Class Presentations Instructors: All Locations for these two class sessions will be announced at a later date.