Research Group "Economic Design & Behavior"

Our "Economic Design & Behavior" research group was established in August 2023 under the leadership of Axel Ockenfels.

Our research focuses on what might be called “behavioral economic engineering”, which combines tools from game theory and behavioral research to design markets, algorithms and competitive strategies. This has many useful applications.

Human behavior affects every aspect of our lives and determines the success of societies, markets, organizations, and individuals. Indeed, addressing complex economic and social challenges such as COVID-19, climate change, and various market failures requires significant behavioral changes and the design of innovative market and choice architectures. Our research explores the nature and determinants of human behavior and on this basis develops market and other mechanisms to effectively address behavioral and institutional challenges in our economies and societies.

Approaching and understanding human behavior and real-world institutions often requires an interdisciplinary and multi-method approach. Recognizing that human behavior can deviate from standard economic predictions, we use tools from game theory, behavioral and experimental economics, and related fields to study and model behavior. This research is integrated with an economic design approach, developing mechanisms that align incentives and behaviors with overarching goals. Experiments – both in the laboratory and in real-world settings – play a central role in studying behavior and in designing, testing, and implementing new mechanisms.

Our research efforts have been enriched by collaborations with governments, market platforms, companies, and fellow researchers in Europe and the U.S. These collaborations have yielded practical contributions, such as early input into the design of eBay's and others' auction platform and reputation mechanism, as well as the design of various markets and choice architectures in the Internet, electricity, climate, telecommunications, finance, transportation, and other sectors. We also contributed to crisis market design, with our work helping to secure vaccine supplies, prevent power outages, reduce energy consumption during crises, and incentivize climate action.