Depiction of Behavioural Economics

Behavioural Economics

How real people make real decisions

Consumers are complex, and understanding their choices is complicated. To be a market leader, you need to understand what drives their behaviour, and you need to be able to anticipate this behaviour accurately.

Behavioural economics combines behavioural science, psychology and economics, revealing why consumers do what they do, and predicting what they will do. Armed with this knowledge, you can take the correct decisions to drive growth today—and plan for tomorrow.

After all, really knowing your consumers and delivering excellent consumer outcomes is the best way to boost your bottom line.

Increasing influence

No matter which markets you operate in, behavioural economics is playing an increasingly influential role. It has become the bedrock of regulation, policymaking, and commercial decisions for online and offline businesses.

The real magic happens when behavioural economics is applied as one part of a three-pronged approach:

  • behavioural economics: what lies behind consumer action?
  • finance expertise: how profitable are different consumers?
  • competition economics: how do you compete for those customers?

Robust and realistic

More than merely a menu of ‘biases’, behavioural economics is a framework to help you navigate the uncharted waters of predicting consumer behaviour.

Whether you’re looking for a fresh perspective on commercial pricing decisions or seeking to understand how a market really works, Oxera’s cutting-edge behavioural economics experts can help.

Linking up with the brightest minds in this field, we test and deliver real-world solutions to your biggest challenges.

  • De-risk: behavioural economics minimises regulatory and conduct risk while offering insight into consumer preferences. This helps you to shape your proposition, product, pricing strategy, and customer communications, enabling you to win commercial advantage without unwanted regulatory and conduct risk.
  • Comply: Competition authorities and regulators are increasingly using behavioural economics insights in their investigations. We can contribute with strategies built on behavioural economics experiments and market modelling.
  • Experiment: Our expert analysis informs evidence-based strategy and policy to shape consumer behaviour. Our lab-based, online, and field experiments can help you to achieve better communication with your target market.
  • Launch: Oxera’s test-and-learn approach takes evidence from experiments, refines it, and gives clients the confidence to apply the results to real-world situations. Ultimately, this delivers mutually beneficial outcomes: satisfied consumers and better commercial results.

Experience counts

Here are some of the ways that our behavioural economics experts are making a difference.

Quantifying consumer outcomes to manage conduct risk, and Product Oversight and Governance (POG)

Governments are increasingly looking to ensure that company practices are fair. In this context, how can boards and senior managers satisfy themselves that practices are fair and in line with their firm’s principles and risk appetite?

Using behavioural experiments to drive remedy design—our pensions experiment for the UK Financial Conduct Authority

The UK Financial Conduct Authority commissioned Oxera to perform a major study on how consumers respond to cost metrics—and how, in this case, simplicity was not the most effective approach.

Underpinning regulation and competition policy with expert behavioural insights—a study for ACM, the Dutch competition authority

Robust market analysis through behavioural Industrial Organisation (IO)

Amazon commissioned Oxera to conduct a behavioural experiment to test the impact of regulatory interventions, such as the proposal for the EU Digital Markets Act (‘DMA’), on innovation in the EU.

Training, webinars and workshops

We provide behavioural economics training for firms, law firms, and regulators across Europe, including EIOPA (the European Insurance and Occupational Pensions Authority), the insurance supervisory authority IVASS in Italy, UK Finance, the Financial Conduct Authority in the UK; South West Water; and WICS (Water Industry Commission for Scotland).

Oxera's experience of working in economic regulation on both sides of the table, combined with their commercial experience, meant that they were able to make a significant contribution to the approach we took to some difficult economic and financial issues.

- Lucy Beverley, Director, the Competition and Markets Authority in the UK

Behavioural Economics Insights

In many countries, the five-day working week is an institution so culturally ingrained that we rarely, if ever, pause to ask the question: is there a better way of doing…
Digital channels create new commercial opportunities and conduct risks (as well as commercial risks) for providers of financial services. There are important questions about the extent of provider responsibility and…

The Digital Markets Act and incentives to innovate

Amazon commissioned Oxera to conduct a behavioural economics experiment to test the impact of regulatory interventions, such as the proposal for the EU Digital Markets Act (‘DMA’), on innovation in the EU. This experiment brings new evidence of the likely effect of these regulatory proposals. The results showed that… Read More

Image depicting The Digital Markets Act and incentives to innovate

Behavioural Economics in numbers

100%

of consumers, executives and regulators have bounded rationality

2.8x

We found that the best prompt makes consumers 2.8x more likely to shop-around

150+

government institutions using behavioural economics in public policy worldwide (Source: OECD)

1.4x

We found that the best cost metric makes consumers 1.4x more likely to choose the cheapest pension