Mass-Behavioral Economics

Behavioral economics has had enormous success in the last several decades in making progress towards its goal of making economic theory more psychologically realistic. Through the use of careful experiments, clever modeling and convincing analysis of data, behavioral economists have developed a powerful, predictive portrait of how humans reason about and respond to risk, uncertainty, time delay and small scale social interactions. But behavioral economics thus far has not yet seriously turned its powerful lens towards the classical focus of economic theory: understanding how individuals respond to and reason about the mass behavior of large groups of people. Yet understanding the special psychology of mass behavior, and how it impacts markets, online cohorts, mass movements and electorates, has never been more urgent in our increasingly connected world. In this research, the investigator will use the powerful conceptual and empirical tools of contemporary behavioral economics to answer some basic questions about the psychology of mass behavior in order to guide the development of predictive models and guide decisions. Using experiments, the researcher will explore how large groups reason together, how individuals reason about large groups and how people respond to the strategic powerlessness of acting as a member of a large group. The dataset gathered by the investigator and the conceptual insights gleaned from it will allow us to better understand the function of human institutions, the way people form beliefs, and the rationality of large groups of people acting and interacting in concert.

Behavioral economics has mostly, so far, focused its attention on understanding how people reason about and form preferences over either (i) exogenous variables or (ii) very small-scale strategic interaction. For instance, the vast majority of empirical and theoretical work in the field focuses on understanding individual-level optimization, statistical inference, risky choice, ambiguous choice, intertemporal choice, social preferences, and behavior in games that involve only a handful of players. This focus has been highly productive, generating both (i) a set of sharp characterizations of the structure of human reasoning and preference formation in these settings and (ii) a set of conceptual and empirical methods for characterizing and modeling individual behavior. This work will extend these methods to include how people reason about and respond to the behavior of large groups of other people (“mass behavior”). The idea is to use the same style of experiments that have been honed for decades for understanding statistical inference, optimization and preference formation in response to exogenous variables, and simply replace these exogenous variables with the endogenous aggregate behaviors of large groups of other people. The research project will focus on understanding (i) how large groups of people reason or compute together in various canonical institutional settings, (ii) how individuals respond to the strategic powerlessness of being a member of a large group (i.e., of being a “price taker”) and (iii) how people reason about the outcomes of mass interaction when forming social opinions and views. The data collected will be relevant to (a) building better models of large-scale institutions like markets, organizations and electorates, (b) understanding mob behavior and mass movements, and (c) designing better decisions for an increasingly integrated and coordinated world.

This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.

Award Number: 2619167
Principal Investigator: Ryan Oprea
Funds Obligated: $300,713
State: CA