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Meghnad Desai Academy of Economics hosted Mr. Karan Arora, Founder and CEO, BEAST, for a session on Behavioural Economics. BEAST, which started as a campus sustainability initiative, helps make better decisions in the spheres of health, wealth, happiness, and wellbeing.
The session covered a wide area including the works of eminent economists like Daniel Kahneman and Amos Tversky. It focused on the essence of Behavioural Science and decision making, looking away from the traditional assumption of 'Homo Economicus'. The fact that humans may not always make fully rational decisions and are likely to get influenced by emotions or other factors, thus making us 'Homo Sapiens'.
Several case studies and their implications on policymaking were discussed. Mr. Arora spoke about the idea of 'choice architecture' that allows one to 'opt-in' and 'opt-out' of situations when nudged in a certain direction. One such example was an App developed by HSBC that nudges clients based on the goals they set for themselves.
The session was intellectually stimulating as it brought to light not just nudge but also 'sludge' policies, which use behavioural insights negatively to influence the decision making of the stakeholders. This brings into question ethical and privacy concerns, stemming out from the immense data that companies collect from their consumers. An important takeaway from this session was that while behavioural economics is an important and invariantly useful field of knowledge, it is crucial to acknowledge the lacunae and make constructive policies to curb unethical practices originating from sludge operations.