Rady School Opens New Center for Behavioral Economics at Otterson Hall
Last fall, the Rady School established the Center for Behavioral Economics, giving Rady faculty the ability to conduct experiments on campus, at Otterson Hall. Rady Professor Uri Gneezy, an expert in behavioral economics, led the efforts to develop the center.
Behavioral economics analyzes social, cognitive and emotional factors to understand the economic decisions of people. Rady faculty interest in this field is not limited to Professor Gneezy, as behavioral economics incorporates the research of those in marketing, psychology, strategy, management and economics. Since its opening, the center has been used by numerous Rady faculty.
The Center for Behavioral Economics allows Rady faculty to conduct research on the Rady School campus. The Rady IT department helped outfit the center with 12 computers for use in experiments, while the school hired a lab manager to run the experiments. The lab manager finds UC San Diego students to take part in the experiments, then schedules and runs them with oversight by Rady faculty. The professors and their research teams then compile the data, using an analytical approach to determine what the subjects’ behavior actually means and how the information can be utilized in the real world.
“More companies should run experiments,” said Professor Gneezy. “Two important things can be determined from this type of research: what motivates people and what a reasonable pricing structure should be for a particular product. This is integral information in order for any company or product to be successful.”
Two of the recent experiments conducted by Rady faculty at the center include an “ultimatum game,” where fairness is studied; and a wine pricing experiment, designed to determine how the pricing of wine affects one’s judgment of its quality.
Behavioral economics is a relatively new field of research and many consider University of Chicago Professor Richard Thaler the father of behavioral economics. Thaler has been a visiting scholar at Rady for the past several years.
To learn more about Professor Gneezy’s research, visit /faculty/directory/gneezy/.