HR Must Study Personal Economics - A Behavioral Economics Approach

ABSTRACT

Organizations in both the public and private sectors are increasingly using behavioural economics techniques to address a range of problems, including mechanism design and incentive architecture. Yet, there hasn't been much attention paid to how behavioural economics' experimental techniques might assist businesses in learning more about their (current or potential) workforce, and particularly about the preferences and tendencies of their employees. This has significant ramifications for overall organisational performance because certain designs or incentives may only influence people who share a certain disposition (such as those who are risk-averse or fairness-oriented), but not others, or they may even have the opposite effect on people who have different sets of preferences. In this post, we highlight a variety of intriguing directions for using a behavioural economics lens to comprehend and control employees. Also, a thorough case study is given.