Behavioral Economics has been one of the hottest topics over the past year. Richard Thaler, who is one of the most important economists of our era, was awarded a Nobel Prize in Economics this year. His work in helping people save by way of their 401K’s has increased savings rates from 45% in 2005 to over 83% in 2016. The principals he described in his book “Nudge” have been applied widely by human resource professionals and policy makers around the world.
Investment firms have used theories based on behavioral economics to explain anomalies in the market, focused on decisions related to the stock market, money management and asset valuation. Today, there is even a “Behavioral Economics” ETF!
Equity compensation professionals are becoming more knowledgeable about the fundamentals of behavioral finance and how to incorporate them into remuneration design. In this way, they seek to gain a better understanding of the biases that may cause participants to make decisions that are not always in their best interests.
While many of these professionals are aware of behavioral economics, they do not have a good understanding of what it really is.
This presentation provides insight into the concepts and principals that underlie behavioral economics. Armed with these insights, equity compensation programs can be designed for greater effectiveness.
Tim Houlihan has been applying behavioral economics for 20 years and previously served as the Vice President of Reward Systems at BI WORLDWIDE, a $600,000,000 global incentive and recognition firm. In his current role, he works as a bridge that connects academic research to the corporate world. His chief objective is to apply the lens of behavioral sciences to solve strategic business issues. His academic partners include researchers at Carnegie Mellon, Duke, Harvard, Quinnipiac and Monmouth Universities and he has worked with more than 100 of the Global 1000 firms. Tim is well known for his curiosity and is always on the prowl for new insights into human behavior. Tim has two children and is very happily married in Minneapolis, Minnesota.