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Behavioral and Experimental Economics Cell

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Behavioral and Experimental Economics Cell

Behavioral and Experimental Economics are new exciting fields in the Economics space. Developed countries like the U.K., U.S. and Australia have already started experiencing the benefits of behavioural interventions in public policy schemes related to areas as diverse as retirement planning, unemployment, healthcare, education and promoting charitable behavior. Corporations across the world have begun to use behavioural economics to improve employee productivity and hiring and promotion policies, increase efficiency of marketing strategies and assist investors in optimizing returns on savings.

Behavioral Economics incorporates insights from other social sciences like psychology and sociology to enhance our understanding of how and why individuals make decisions that, from the perspective of standard economic theory, appear irrational. These insights can improve predictions about behaviour and therefore help authorities to nudge people in the desired direction.

Experimental Economics is a widely-used research method to explore the validity of standard economic theories. Results of carefully designed and scientifically conducted experiments has played a critical role in contributing to advancement mainly in development and behavioural economics.

Symbiosis School for Economics (SSE) strives to be at the forefront of empirical and collaborative research with local and national level Government bodies as well as private organizations. As part of our endeavour to achieve this objective SSE has established the Behavioral and Experimental Economics Cell.

The Behavioral and Experimental Economics Cell (BEEC) has been created to provide a platform to faculty and student researchers interested in investigating behavior patterns and decision-making process by conducting experimental & behavioural study. The Centre aims to cater to the needs of students and researchers with respect to understanding concepts of Behavioral and Experimental Economics by organizing workshops as well as to enable researchers to administer experiments through training programmes mainly in laboratory experiments. The Centre also aspires to undertake and collaborate for research projects in the areas of consumer preferences, identity & institutional economics, public policy and development and gender economics.

To ensure that all experiments are conducted as per international standards, the Centre has an Ethical Committee to preapprove all experimental research activity conducted here.


Student Research under BEEC
Abstracts

Mutual Funds and Investor Behavior
Yash Khaitan (B.Sc.2015-18)

The study aimed to investigate the impact of behavioural biases on the Indian investor’s decision while investing in mutual funds. Special focus was given to two biases, namely disposition effect and loss aversion. Empirical data has been collected through administrating a questionnaire. The data was analysed using Chi square tests for association and goodness of fit to study the impact of these biases on investors decision making. From the results it could be concluded that for the sample considered the biases can have a direct impact on the decisions taken by investors. The paper also tries to analyse the relation between biases and education, gender and job profile.

Demographic Factors Influencing Financial Literacy Among Working Individuals in Pune
Manika Pant (B.Sc.2015-18)

Financial literacy is the ability to make informed judgments and to take effective decisions regarding the use and management of money. Financial literacy enables individuals to improve their overall well-being. The purpose of this study was to analyze the relationship between demographic variables like age, gender and education on financial literacy of a cohort of working individuals in Pune. Primary data was collected using a structured questionnaire. The questionnaire attempted to measure the respondents financial knowledge, financial behavior and financial attitude. 161 responses were recorded. The data analysis suggests that overall financial literacy among working population Pune is moderate. 139 out out of 161 respondents scored around 63%. The results suggest that age is the only demographic variable correlated to financial literacy.

Dying Influence of Theatre in India
Urmila BG (B.Sc.2015-18)

India is land of a variety of cultures and traditions. These traditions and cultures have given birth to diverse art forms. Art can be divided into visual arts, fine arts and performing arts. Theatre performance is an important form of performing arts. Theatre is not only for entertainment purposes but also a medium to pass on social messages. Historically, theatre performances used to popularise social issues which negatively affected the society as entertainment. Performed across the country in over twenty-four languages, theatre is slowly losing its past glory. The study was qualitative and aimed at finding the factors that affect a person’s decision to spend or not on a live theatre performance. The data was collected by survey method and analysed to explore the relationship between exposure to theatre in childhood and willingness to pay for theatre in later stage of life. A total of 101 responses were received from a cohort between the ages of 18 to 50 years.

Risk Appetite Across Different Domains in Association with Gender
Mugdha Chouksey (B.Sc.2015-18)

The aim of this study was to analyse any difference in risk appetite of individuals with respect to gender. The purpose of this study was to explore whether women are as risk averse as men across different domains. The domains studied include financial risk, the house money effect, risk associated with adventure and sexual intent. An experiment was conducted on a sample of 20 people. The responses obtained from the participants were analysed using the non-parametric chi square test for association. From the analysis it was inferred that women are not more risk averse than men across all domains as they were observed to have a higher risk appetite than men in the adventure sports domain. However, it was observed that in three out of the four domains being tested for men had a higher risk appetite than women i.e. they are willing to make decisions involving a higher amount of risk than women.

Influence of Social Environment on Consumer Behaviour for the Purchase of Branded Products
Reetama Das (M.Sc.2016-18)

A consumer’s social surroundings play a very crucial role in consumer behaviour. The social class or social group the consumer belongs to determines his taste and preferences. A consumer always has a need to belong, to be a part of a group or class to define his or her identity. Hence to live up to the norms of the social class or group he has to fulfil the expectations of that group in order to maintain group membership. When people buy brands, they don’t just buy it for consumption purpose but to expresses their identity or aspiration. Social media also plays an important role in influencing consumer behaviour.

Influence of Behavioral Biases on Financial Decision Making: A Gender Based Study
Mrunal Shahade (M.Sc.2016-18)

The field of behavioral finance, evolved from the limitations of the efficient market hypothesis. This research studies the influence of Affect Heuristic, with respect to loss aversion, risk aversion and regret aversion, Self-attribution Bias, Substitution Effect and Illusion of Control on the financial decision making of investors. Being a gender based study, this research also analyses whether gender differences persist in financial decision making. A qualitative research was conducted and the data of which was collected by means of a questionnaire, including thought experiments. Further, for data validation, the Chi-square Goodness of Fit Test and the Chi-square Test of Association were used. The study reveals the impact of heuristics on investor behaviour while reflecting many thought-provoking results that contradict the existing literature as well as many stereotypes present about gender and financial investing behaviour.

Gender Differences in Sealed Bid First Price Auctions: Regret and Learning Speed
Ellendula Venkat Raj (BSc.2014-17)

The differences in bidding strategies and aggressiveness affects one’s capacity to leverage financial instruments to one’s advantage and accumulate large amounts of wealth. Earlier research has indicated some differences between genders in these behaviors. This paper studies the gender differences in bidding behavior in terms of regret and learning speed. These factors affect how aggressively one bids and how fast that person either learns the bidding strategies or develops his own. The experiment was conducted on 36 participants a subgroup of whom underwent the winners’ regret treatment. Female participants who underwent the treatment lowered their average bids as the auction proceeded by assimilating the information that was being provided to them. Female participants who were in the control group hadn’t changed their bids significantly over the number of auctions and thus they behaved as expected. Males who underwent the treatment too behaved as expected by lowering their average bids as the auctions proceeded. However, the males in the control group were found to be an exception as their average bids increased over the number of auctions conducted. Thus, out of the seven hypotheses that were being studied in this paper, only one was substantially proved false. This however is only a limitation that can be overcome with more participants thus allowing for the Law of Large Numbers to take its effect

Effect of Reciprocity and Fairness on Consumer Behaviour Analysis on Restaurant Industry
Smriti Raizada (BSc.2014-17)

Fairness and reciprocity are deeply rooted behavioural traits that are known to influence decision making in a variety of contexts. The consumption behaviour of customers of service sector industries is one context that reflects fairness and reciprocity, directly as well as indirectly. The norms of reciprocity and fairness have gained importance due to their extensive use in product marketing, consumer base enhancement and brand loyalty strategies. The research undertaken focuses on the relationship between experiences of service, food, restaurant ambience and ‘value for money’ by a customer, the perceived fairness of these experiences and the reciprocal behaviour shown by the customer in the form of feedback or review. An analysis was conducted using data extracted from a popular online food outlet search app. 120 reviews of a variety of restaurants in the Pune area were used to conduct the analysis. The results of the analysis indicated that the highest correlation was between service and positive customer ratings and feedback, from the selected variables. This finding indicates that fair treatment of customers by restaurant staff is critical for garnering new customers. Findings from this study can be used by investors to channel funds into areas that have a direct impact on sales, like staff training and education.

Online Shopping: A Study of Factors Influencing Consumers to Shop Online with Focus on Apparels
Ramyani Dasgupta (BSc.2014-17)

The objective of this research is to identify and examine the factors that influence online shopping with a specific focus on apparel. The e-tail industry is highly competitive and must also compete with ‘brick and mortar’ stores and malls. Survival in such market conditions depends on increasing and maintaining the customer base. Thus, it is imperative that retailers go beyond the basic discount models and use other strategies to capture market share. The research was conducted with the help of primary data collected through questionnaires, from 60 college students aged between 17-25 years. Results obtained show that website design, quality and features are more important factors than

customer service, time saving and convenience in purchasing decisions of apparels online. The inferences made from this research can provide a guideline to online apparel retailers on where to invest funds so as to maximise returns, for eg. the study indicates that for online apparel purchasing decisions the customers interface experience holds more decision weight than time saving as a decision factor. This implies that online retailers could benefit more from better technology rather than faster delivery.

How to manipulate people’s decision making process, even under various cognitive biases?
Ananya Chattaraj (BSc.2014-17)

The existence of complex influences of psychological factors in the decision making process of individuals, has been established. The Framing effect can be used to manipulate people’s choices in everyday routine choices. The presentation of choices, whether in a positive or a negative frame, plays a dominant role in the choice that they make. It is seen that decision making is not only affected by the framing effect but also can lead to biases in decision making. The current study examines whether framing effect would work in a scenario where people are exposed to three major cognitive biases: morality bias, representative bias, and discounting bias. An analysis was conducted using a sample size of around 156 individuals consisting of college students as well as the working youth. Thought experiments were used and responses of participants were collected with the help of a systematically formulated questionnaire. The study results indicate that manipulating the frame of the possible choices can change decisions revealing their biases. Findings from this research can be used extensively in the field of marketing, to influence decisions makers purchases.

Fairness in Management: A Study on Employee’s Perception
Yash Taparia (BSc.2014-17)

Fairness is one key to the challenge confronted by every organization: motivating its employees.

Research shows that employees are motivated when treated fairly, organizational resources are allocated fairly and when organizational decisions are made in a fair manner, thereby unlocking efficient performance of employees. When fairness is ensured at work employees develop close bonds of trust and are motivated to strive collaboratively for a long term to achieve the goals of the firm. Employee recognition being a parameter to judge fairness in management reinforces and rewards the most important outcomes that people create for any organization. This focus of this research is employee perceptions regarding the recognition they receive at work.

Primary data was collected with the help of a questionnaire from respondents belonging to two IT companies. The respondents were expected to answer questions, on a linear scale, pertaining to recognition of work and performance appraisal. The sample size was taken to be 80 considering 40 respondents from each company. Findings from this research emphasized on the fact that receiving informal recognition, guidance from superiors, receiving recognition for team accomplishments, etc. were not in compliance with the company claims. This implies that on these parameters the company management is perceived unfair and must take measures towards employee recognition to ensure enhancement in work performances, commitment and motivation in striving towards achieving company goals.

Faculty Profiles:

Dr. Bidyut Kumar Ghosh

Dr. Bidyut Kumar Ghosh is working as Assistant Professor at Symbiosis School of Economics and obtains his M.Phil and Ph.D in Economics from the University of Burdwan. He was a JRF in the Economics department of the University of Burdwan for a period of four years to pursue his PhD. His PhD topic was “Growth and Cropping Pattern Changes in West Bengal Agriculture during 1970-71 to 2005-06” which has also been published as a book titled “Agricultural Growth and Agrarian Relations” by Serial Publications, New Delhi. He has completed his postgraduate degree in Economics from the same university with specialization in Statistics and Econometrics. Dr. Ghosh has more than ten years of teaching and research experience both at the national and international level. Prior to joining Symbiosis School of Economics, he has working as Assistant Professor in Wolaita Sodo University, Ethiopia.His teaching areas include Econometrics, Statistics, Research Methods using R, Eviews and Stata. Dr. Ghosh has published many research articles in reputed national international refereed journals such as the Indian Journal of Social Work, ICFAI Journal of Agricultural Economics, IASSI Quartely, Bangladesh Development Studies etc. on the topics of agricultural growth, crop diversification and rural development. He has also authored two books in Agricultural economics. His areas of research interest covers agricultural and resource economics, rural development and financial economics. He has also keen interest in interdisciplinary research works covering Business Management, Sociology and Travel and Tourism management.
Dr. Bidyut Kumar Ghosh Dr. Bidyut Kumar Ghosh
bidyut.ghosh@sse.ac.in
020-25675406 ext.236

Ashlesha Khedekar-Swaminathan

Ashlesha is an Adjunct Faculty at Symbiosis School of Economics since June 2014. She is pursuing her doctoral research in behavioural economics at Symbiosis International University. Ashlesha has more than 11 years of work experience in the Treasury departments of HDFC Bank and ABN AMRO Bank handling trading, hedging products and client advisory. She has worked closely with organization behaviour experts for more than three years at FLAME University conducting interventions and training programs for Indian and multinational companies. Ashlesha regularly consults for various organizations on behavioural design interventions in areas like rewards and recognition and employer branding, client risk assessment for investment advisors, strategies for marketing luxury goods and investment art. She contributes articles on investor behaviour to www.investorsareidiots.com. Her interest areas include Behavioral economics and finance, Identity and Gender Economics.
Ashlesha Khedekar-Swaminathan Ashlesha Khedekar-Swaminathan
ashlesha.swaminathan@sse.
ac.in
020-25675406 ext.224