James G. Dinan Endowed Professor, Professor of Operations, Information and Decisions, The Wharton School, University of Pennsylvania
General Session 2: Consumer Behavior
Decision Biases Improving the Quality of Our Everyday Decisions
In a perfect world, people would always make perfect decisions. But we’re far from perfect: biases, irrational assumptions, and other overriding impulses make our decision-making processes fraught at best. Over the past 30 years, psychologists and economists have joined forces to study how people process information and actually make decisions, rather than how people would make decisions if they were fully rational and without bias. This research program—dubbed behavioral economics—has given us a deeper understanding of how decisions deviate from optimal choices, as well as the (sometimes grave) consequences of such deviations. Put plainly, people are poor intuitive statisticians, and that means when they ‘just think’ about situations in which some data or casual observations exist, they tend to make serious inferential errors—and systematically biased decisions.
Throughout this engaging keynote, Katy Milkman discusses the most common errors we make, with particularly important implications for managerial and workplace settings. Using evidence-based examples, she introduces a number of common decision biases that influence managers, employees and consumers alike. She then discusses the best research-based strategies we can use to avoid these biases. With her guidance, we can improve our awareness of situations where business biases are likely to arise, and thereby improve the quality of the decisions we make.
Katy Milkman is a professor at The Wharton School of the University of Pennsylvania and holds a secondary appointment at Penn’s Perelman School of Medicine. Her research explores ways that insights from economics and psychology can be harnessed to change consequential behaviors for good, such as savings, exercise, vaccination take-up and discrimination. In her TEDx talk, she describes some of her key findings on this topic.
Katy has received numerous awards for her research including an early career award from the Federation of Associations in Behavioral & Brain Sciences. When under 30, Milkman was named one of the world’s top 40 business school professors under 40 by Poets and Quants and she was a finalist for the Thinkers 50 2017 Radar Thinker Award. She has published dozens of articles in leading social science journals including Management Science, the Proceedings of the National Academy of Sciences, and The Journal of Finance, which have reached a wide audience through regular coverage in major media outlets such as NPR, The New York Times, The Washington Post, The Financial Times, and Harvard Business Review. She also frequently writes about topics related to behavioral science for The Washington Post and Scientific American. In 2018, she began hosting Charles Schwab’s popular podcast “Choiceology with Katy Milkman,” which explores key lessons from behavioral economics about decision making. Her book How to Change: The Science of Getting From Where You are to Where You Want to Be, is available now.
Katy has been recognized with many accolades for her ability to communicate ideas to students. She is a repeated recipient of the excellence in teaching award for the Wharton undergraduate division, was voted Wharton’s “Iron Prof” by the school’s MBA students for a PechaKucha-style presentation of her research, and has repeatedly been one of ten finalists for the Anvil Award for Wharton’s most outstanding MBA teacher.
She is the former president of the Society for Judgment and Decision Making, an APS Fellow, and an associate editor at Management Science, where she has handled manuscripts about behavioral economics since 2013. She has worked with numerous organizations on research and/or consulting, including Humana, Google, Walmart, the U.S. Department of Defense, 24 Hour Fitness and the American Red Cross.
Katy co-directs the Behavior Change for Good Initiative at the University of Pennsylvania, whose work is being chronicled by Freakonomics Radio. She received her undergraduate degree from Princeton University (summa cum laude) in Operations Research and Financial Engineering and her PhD from Harvard University’s joint program in Computer Science and Business.