ECON E-1034: Consumer Behavior

Syllabus - Fall 2015

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 doctoral students from the Marketing Unit at Harvard Business
School.

Tami Kim Grant Donnelly

Fourth-Year Doctoral Student, Marketing Third-Year Doctoral Student, Marketing
Harvard Business School Harvard Business School
tkim@hbs.edu gdonnelly@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
Wednesday evening. Responses should be ½ to 1-page in length (quality over quantity!); 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 10:00PM on the Monday before class so that
they can be read and incorporated into the discussion. Late assignments will be accepted but you
will not be able to receive full points and will not get our feedback. [25% of grade]

INDEPENDENT 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 – 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 will be dedicated to student presentations.
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]

*Note: your midterm project proposal and the final project may be in pairs. We will update you
with more details as we get a better sense of the final enrollment.

Week 1 (9/2): Introduction to Consumer Behavior

Instructors: Tami 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:

 Please take the survey that was sent out, if you have not already
 Week 2 (9/9): Heuristics and Biases
Instructor: Tami

Key Concepts
 Bounded rationality
 Reference points
 Framing
 Anchoring and adjustment

Week 3 (9/16): Goal Setting and Self Control

Instructor: Grant

Key Concepts
 Motivation to attain goals
 Behavioral change

Week 4 (9/23): Financial Decision Making

Instructor: Grant

Key Concepts
 Introduction to financial-decision making
 Mental accounting

Week 5 (9/30): Preferences and Choice

Instructor: Tami

Key Concepts
 The nature of preferences
 Context effects

Week 6 (10/7): Psychology of Price

Instructor: Grant

Key Concepts
 Placebo effects of price
 The endowment effect
 Week 7 (10/14): Experiential Consumption (MIDTERM DUE)
Instructor: Tami

Key Concepts
 Collectible experiences
 Age and experience valuation

Week 8 (10/21): Prosocial Behavior and Happiness

Instructor: Grant

Key Concepts
 Spending for happiness
 Spending on others

Week 9 (10/28): Digital Marketing and WOM

Instructor: Tami

Key Concepts
 Online reviews
 Targeted advertising

Week 10 (11/4): Social Influence

Instructor: Grant

Key Concepts
 Social norms
 Persuasion
 Foot-in-the-door vs door-in-the-face tactics

Week 11 (11/11): Consumer Behavior and Health

Instructor: Grant

Key Concepts
 Defaults and medical decision-making
 Overconsumption and portions
 Week 12 (11/18): Policy and Firm Applications
Instructor: Tami

Key Concepts
 Libertarian paternalism
 Bad nudges
 Course summary

Week 13-14: Class Presentations

Instructors: All

 Details TBD