>> Download and print the worksheet.
- Read at least the primary document below and answer the questions on the worksheet.
- Remember that you will be marked on participation and engagement and that this contributes to your coursework grade for the module.
** Bring your completed worksheet to the tutorial (as well as the article) **
Erta, K et al (2013), Applying behavioural economics at the Financial Conduct Authority, FCA Occasional Paper No.1, April
Note: As this is a fairly lengthy document (71 pages), each discussion question relates to specific parts of the paper (specified after the question), rather than requiring you to read the paper in its entirety
- Outline the general case the FCA makes for using behavioural economics in their regulation of retail financial markets
[ see: Executive summary, chapter 1 ]
- Select one bias or effect caused by bias from each of the three classifications in Table 3 (p17) and explain its impact on consumer behaviour
[ see: Chapter 2, Chapter 3, Annex ]
- Explain how consumer biases may relate to behaviour by firms and the degree of competition within markets
[ see: Chapter 4 ]
- Identify the general types of policy intervention that the FCA can pursue, distinguishing between ‘hard’ and ‘soft’ paternalistic options. What factors may affect how successful a policy intervention may be?
[ see: Chapter 8 (and Chapter 7 as background) ]
Lunn, P (2014), Behavioural Economics and Regulatory Policy, OECD – 9th meeting of the Regulatory Policy Committee, 12-13 November
Sunstein, C (2014), There’s a backlash against nudging – but it was never meant to solve every problem, The Guardian, April 24th
Wheatley, M (2014), Making competition king – the rise of behavioural economics at the FCA, Financial Conduct Authority, Mar 25th