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)   Tami  Kim    
Fifth-­‐Year  Doctoral  Student,  Marketing   Third-­‐Year  Doctoral  Student,  Marketing  
Harvard  Business  School   Harvard  Business  School  
kbarasz@hbs.edu   tkim@hbs.edu  
   
Grant  Donnelly   Bhavya  Mohan    
Second-­‐Year  Doctoral  Student,  Marketing   Fifth-­‐Year  Doctoral  Student,  Marketing  
Harvard  Business  School   Harvard  Business  School  
gdonnelly@hbs.edu   bmohan@hbs.edu  
 
   
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]  
 
 
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  
 
Key  Concepts    
• Introductions  (instructors  and  students)  
• What  are  experiments?  
• Approach  to  reading  academic  articles  
• Intro  to  social  psychology  and  behavioral  economics  
  
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  email  to  instructors  by  5:00PM  
on  Sunday,  September  7:    kbarasz@hbs.edu)  
 
 
Week  2:    Heuristics  and  Biases  
Instructors:    Tami  and  Kate  
 
Key  Concepts    
• Bounded  rationality  
• Reference  points  
• Framing  
• Anchoring  and  adjustment  
 
 
Week  3:    Goal  Setting  and  Self-­‐Control  
Instructors:    Grant  and  Kate  
 
Key  Concepts    
• Motivation  to  attain  goals  
• Behavioral  change  
 
 
 
Week  4:    Financial  Decision  Making  
Instructors:    Grant  and  Bhavya  
 
Key  Concepts  
• Introduction  to  financial-­‐decision  making  
• Decision-­‐making  influenced  by  mental  accounts  
 
 
 
Week  5:  Preferences  and  Choice  
Instructors:    Kate  and  Bhavya  
 
Key  Concepts  and  Questions  
• The  nature  of  preferences  
• Context  effects  
 • Variety  seeking  
Week  6:  The  Psychology  of  Price  
Instructors:    Bhavya  and  Kate  
 
Key  Concepts    
• Placebo  effects  of  price  
• The  allure  of  free  
• The  endowment  effect  
 
 
Week  7:    Prosocial  Behavior  and  Happiness  
Instructors:    Grant  and  Tami  
 
Key  Concepts  
• Happiness  
• Spending  for  Happiness  
• Spending  on  Others  
 
 
 
Week  8:    Experiential  Consumption  
Instructors:    Tami  and  Grant  
 
Key  Concepts  
• Collectible  experiences  
• Co-­‐creation  of  value  
• Age  and  experiential  consumption  
 
 
Week  9:    Social  Influence  
Instructors:    Kate  and  Grant  
 
Key  Concepts  and  Questions  
• Social  norms    
• Persuasion  and  social  influence  
• Foot-­‐in-­‐the-­‐door  versus  door-­‐in-­‐the-­‐face  tactics  
 
 
Week  10:    Habits  and  Intertemporal  Choice  
Instructors:    Tami  and  Bhavya  
 
Key  Concepts    
• Time  discounting  
• Anticipation  
 • Sequences  of  preferences  
 
 
Week  11:    Consumer  Behavior  and  Health  
Instructors:    Bhavya  and  Grant  
 
Key  Concepts    
• Defaults  and  medical  decision-­‐making  
• Overconsumption  and  behavioral  nudges  in  plate  and  portion  size  
 
 
Week  12:    Policy  and  Firm  Applications    
Instructors:    Bhavya  and  Grant  
 
Key  Concepts    
• Libertarian  paternalism  
• Bad  nudges  
• Course  summary  
 
 
Week  13  -­‐  14:    Class  Presentations  
Instructors:    All  
 
Locations  for  these  two  class  sessions  will  be  announced  at  a  later  date.