International Conference Financial Consumer Protection in Kiev (part I)

On September 12th, there was an International Conference on Financial Consumer Protection in Kiev, Ukraine. Organised by DAI as part of their Financial Sector Transformation project, and co-hosted by the National Bank of Ukraine.

Three laws, in various stages of implementation, were discussed: on consumer credit, on consumer protection, and on a Financial Ombudsman.

I presented in a session with other regulators from Canada, Armenia and Italy; what kan teh Ukraine learn from international examples? See below for my presentation. Other presentations and a video will be made available later (next blogpost).

We also visited the National Bank Ukraine to talk more specifically about the challenges the Ukranian financial system faces.

Below a photo of the NBU, with the touring car that is permanently stationed in front of the entrance to deter protesters. They still showed up at 10.00 (till 13.00 and sheduled every weekday until October 11th, with own sound car and port-o-potties). When driving to the NBU, we saw a very orderly queue at the Maidan square, apparently the “protesters” registering; according to our hosts they were all paid protestors, not real ones. They could make up to 100 Hryvnia, which is about 3 euro.


I also had some time to see some more of Kiev (5 million inhabitants!).

Other pictures: Selfie with St Michael Monastry, Independce square, Garoyle House, Lavra, Motherland statue, St Vloydomyr cathedral, St Andrew cathedral.

Deze slideshow heeft JavaScript nodig.


TIBER 2017 Symposium #TIBER2017

The TIBER 2017 Symposium on Psychology and Economics took place on August 25, 2017 in Tilburg [full program, my tweets from that day]. Interesting day, and good to see some people from the financial industry (ING, Rabobank).

Keynote Ralph Hertwig (from the Gigerenzer-school) kicked off with a talk on Preferential Heuristics, Uncertainty and the Structure of the Environment.

He started by quoting a 1967 paper Man as an intuitive statistician where Peterson and Beach argue that “Man gambles well”. But the Tversky and Kahneman-paradigm a couple of years later proved more influential, puzzling Hertwig.

Description vs. Experience
Tversky and Kahneman were influential with tasks where risks where described, instead of uncertainty experienced.

Hertwig shows figures from A meta-analytic review of two modes of learning and the description-experience gap (2016) DU Wulff, M Mergenthaler Canesco, R Hertwig.

Especially with low, true probabilities, there are large effects between answers to a choice formulated descriptively, versus the choice made after experiencing pay-offs. (DU =  discrete underweighting). From Wikipedia: “in experienced prospects, people tend to underweight the probability of the extreme outcomes and therefore judge them as being even less likely to occur.”


Adaptive decision maker has to make a trade-off between accuracy-effort. So heuristics can be effective, says Hertwig.

Hertwig on risk communication:

And research methods (why do adults score worse than babies or chimps?)

Parallel sessions
First, I went to Ozan Isler; Honesty, Cooperation & Social Influence, who:

we present a new mind-game that is powerful enough to measure honesty at the
individual level and fast enough to be implemented online. The game consists of forty rounds. In each round, the participant is first asked to think of a number between 0 and 9, then shown a single-digit random number, and finally asked to report whether the two numbers match.

Then I saw a talk about changing faces with FaceGen on a trustworthiness scale and playing a dictator game. The cool thing was the stopping rule: they started with N=30 participants, and would add N=5 until BayesFactor was either > 3 or < 1/3.

Next, I saw Tony Evans: The reputational consequences of generalized trust

Final morning talk: Stefan Trautmann – Implementing Fair Procedures? “We find that unfair outcomes are acceptable for the agents if procedures are perceived as fair. However, with opaque allocation decisions, it may be difficult to commit to fair allocation procedures. Indeed, we find a very high degree of favoritism by the decision
makers when they are forced to allocate unequal outcomes, and have no fair (random) procedure available

During lunch I read two interesting posters, one by my DNB-colleague Carin van der Cruijsen on DNB Working Paper No. 563: Payments data: do consumers want to keep them in a safe or turn them into gold?

And a poster by a collaborator of Stefan Zeisberger (Nijmegen), whom we’ll also collaborate with. Basically, people do trade on their beliefs if they are in the plus (have gained), but not/less so when they are in the red.

Afternoon sessions
I attended this talk because it used Bayesian statistics, but the unfortunately did not feature very much in the presentation: Peer effects on risky decision making from early adolescence to young adulthood: Specificity and boundary conditions.

Then Less Likely Outcomes Are Valued Less by Gabriele Paolacci (who is male, incidentally): “We found that people value the gift card less when its availability is uncertain.” Somewhat interesting, not very applicable. This effect might counter the scarcity-argument in marketing a bit, but doesn’t seem likely.

Final talk was Jan Stoop with a replication of The Rich Drive Differently, a Study Suggests (2013). Stoop et al found nothing, across wide range of settings and with 2.5x N of original study.

After tea
First up: Financial Incentives Beat Social Norms: A Field Experiment on Retirement Information Search [Netspar presentation, SSRN). Presentation by Inka Eberhardt. I had seen this work before, then presented by co-author Paul Smeets. It is a really big RCT (N=250,000) RCT, sending letters to get them to sign in to their personal webpage at their pension fund. Q&A was a bit disappointing, I didn’t think the answers were particularly strong.

Pollmann’s talk Let’s talk about money: Attachment style, financial communication, and
financial conflict concluded with a suggestion to Nibud for a web tool Let’s talk about money.

Final talk was Diffusion of culpability in reparations behavior. Results for a novel task were presented, fMRI results are forthcoming.

TIBER 2017 was concluded by Bertil Tungodden’s keynote: Fairness and Redistribution: Experimental Evidence.

Tungodden presented on a paper that is nicely summarized in this HBR article: Is It OK to Get Paid More for Being Lucky?

The Rise of Behavioural Discrimination & Virtual Competition

This blog post Big data and first-degree price discrimination (thanks Patricia) led me to the work of Ariel Ezrachi and Maurice Stucke. As Silvia Merler writes:

[Ezrachi and Stucke] argue that online behavioural discrimination will differ from the price discrimination we have seen in the retail world in three important respects:

  1. Big data allow the shift from third-degree, imperfect price discrimination to near perfect price discrimination;
  2. Sellers can use big data to target consumers with the right “emotional pitch” to increase overall consumption (the demand curve shifts to the right)
  3. As more online retailers personalise pricing and product offerings, it will be harder for consumers to discover a general market price and to assess their outside options, thus implying that behavioural discrimination becomes more durable.

Ezrachi and Stucke published a book in 2016: Virtual Competition (on my to read pile, reserved it at the University Library; book’s webpage also contains a lot of extra info/links).

Behavioural discrimination
I did read their paper The rise of behavioural discrimination (37 European Competition Law Review 484 (2016)).

New dynamics that reduce our welfare? (…) Our article explores how e-commerce and the personalisation of our online environment can give rise to behavioural discrimination, a durable, more pernicious form of price discrimination.”

I. Near perfect price discrimination

Third-degree price discrimination, which involves the charging of different prices to different groups. The price can depend, among other things, on your location (i.e. where you live), your age, or your sex. Cinemas, bus services, and restaurants, for example, may charge adults higher prices than children, students or senior citizens.

By contrast, in this article, our focus is on the possible shift to perfect, or first-degree, price discrimination—where firms can identify and charge for each individual the most he or she is willing to pay, i.e. the reservation price.

“Big Data, learning by doing, and the scale of experiments come into play to better approximate your reservation price.”

“In this data-driven economy, the algorithm—to maximise profitability—will estimate the likelihood of our shopping elsewhere or being aware of better deals and accordingly provide us with a convincing sales pitch.” (e.g. coupons and promotion codes for customers more sensitive to outside options, i.e. more price-sensitive customers who are likeley to compare option, more sophisticated consumers. Naieve consumers can be exploited more efficiently).

II. Shifting the demand curve to the right

Sellers using our personal data to induce us to buy more products or services than
we otherwise would have purchased.

A few consumer biases, which firms may exploit to promote consumption:

  • Use of decoys
  • Price steering, e.g. On Orbitz, Mac Users Steered to Pricier Hotels
  • Increasing complexity; facilitate consumer error or bias and manipulate consumer demand to their advantage (…) companies can, by designing the number and types of options they offer, better exploit consumers’ cognitive overload. In increasing complexity, the firms can also increase consumers’ search and switching costs, thereby reducing the visibility (and attraction) of outside options, and giving them more latitude to exploit consumers.
  • Imperfect willpower “framing effects” (how the issue is worded or framed) do matter. Credit cards are one example. Here they cite a Dutch study The abolition of the No-discrimination Rule from 2000 (!) with N=150 consumers (!) surveyed. Dutch
    merchants could impose surcharges or offer discounts based on how the customer was going to pay. Of the consumers surveyed, 74% thought it (very) bad if a merchant asked for a surcharge for using a credit card. But when asked about a merchant offering a cash discount, only 49% thought it (very) bad. A weak spot in an excellent paper.

The road to near-perfect behavioural discrimination will be paved with personalised coupons and promotions: the less price-sensitive online customers may not care as much if others are getting promotional codes, coupons, and so on, as long as the list price does not increase. (p.488)


Another way to frame behavioural discrimination in a palatable manner is to ascribe the pricing deviations to shifting market forces. Few people pay the same price for corporate stock. They accept that the pricing differences are responsive to market changes in supply and demand (dynamic pricing) rather than price discrimination (differential pricing). So once consumers accept that prices change rapidly (such as airfare, hotels, etc.), they have lower expectations of price uniformity among competitors. One hotel may be charging a higher price because of its supply of rooms (rather than discriminating against that particular user). (…) Thus, we may not know when pricing is dynamic, discriminatory, or both.


III. The durability of behavioural discrimination

it will be harder to know what others see. (…) As personalised offerings increase, search costs will also increase for consumers seeking to identify the “true” market price.

Behavioural discrimination—while not always possible—could occur more often than we expect. Furthermore, as we shift more of our activities to a controlled online ecosystem, it is likely to intensify.

The power to discriminate may be curtailed by possible pushback from consumers (I personally doubt it).

Price comparison websites may foster, rather than foil, behavioural discrimination and switching costs may be higher than one assumes, despite perceived competition being only a click away. (from the footnotes related to this quote: As more consumers rely (and trust) an intermediary to deliver the best results (whether relevant results to a search query or array of goods and services), the less interested they become in multi-homing—that is, from checking the availability of products and prices elsewhere. And: many users who indicated that when a search result is fails to meet their expectations they will “try to change the search query—not the search engine.”


IV. The welfare effects of behavioural discrimination

sellers can manipulate our environment to increase overall consumption, without necessarily increasing our welfare.

Once one accounts the consumer perspective, the social welfare perspective, and the limited likelihood of total welfare increasing, behavioural discrimination is likely a toxic combination. Moreover, behavioural discrimination may blur into actual discrimination due to the limits and costs of refined aggregation.

The worrying thing is that we (and the enforcers) may not even know that we are being discriminated against. Under the old competitive paradigm, one might suspect one was discriminated against if access was inexplicably denied (e.g. restaurants for “whites only”) or was charged a higher price based on this single variable. Under the new paradigm, users may not detect the small but statistically significant change in targeted advertisements (or advertised rates).



As pricing norms change, price and behavioural discrimination eventually may be accepted as the new normal. Just as we have accepted (or become resigned to) the quality degradation of air travel, and the rise of airline fees—from luggage to printing boarding passes—our future norms may well include online segmentation and price discrimination.

The costs can be significant. The new paradigm of behavioural discrimination affects not only our pocketbook but our social environment, trust in firms and the marketplace, personal autonomy, privacy and well-being.


Some other relevant links:

Week van Wilte in Tweets #32


Academy Talk

Samen Job een filmpje opgenomen voor de Insurance Academy. We leggen in 4 minuten uit wat we bij team Consumentengedrag doen. Check



Paar mooie staaltjes van effectieve gedragsbeinvloeding (in filmpje noemden we dat ‘interventies’):

Of mooi onderzocht, effect van simpele vuistregel (“Don’t swipe the small stuff. Use cash when it’s under $20.” reduceerde credit card debt).

En ook aardig is dit rijtje:



Deze grafiek is heel krachtig:


Foxes, Rick Roll & 90-jarige maakt salto van duikplank.


Afgelopen week veel geretweet over ophef rond de memo over diversiteit bij Google. Ik vind het te dogmatisch om biologische component helemaal af te schrijven als mogelijke oorzaak verschil tussen de seksen. (Soms) interessant debat.

Why controllers compromise on their fiduciary duties: EEG evidence on the role of the human mirror neuron system

Why controllers compromise on their fiduciary duties: EEG evidence on the role of the human mirror neuron system – Philip I. Eskenazi, Frank G.H. Hartmann & Wim J.R. Rietdijk. Accounting, Organizations and Society 50 (2016): 41-50.


Business unit (BU) controllers play a fiduciary role to ensure the integrity of financial reporting. However, they often face social pressure from their BU managers to misreport. Drawing on the literature on the human mirror neuron system, this paper investigates whether controllers’ ability to withstand such pressure has a neurobiological basis. We expect that mirror neuron system functionality determines controllers’ inclination to succumb to social pressure exerted by self-interested managers to engage in misreporting.

We measure mirror neuron system functionality using electroencephalographic (EEG) data from 29 professional controllers during an emotional expressions observation task. The controllers’ inclination to misreport was measured using scenarios in which controllers were being pressed by their manager to misreport.

We find a positive association between controllers’ mirror neuron system functionality and their inclination to yield to managerial pressure. In line with our expectation, we find that this association existed specifically for scenarios in which managers pressed their controllers out of personal rather than organizational interests. We conclude that BU controllers’ neurobiological characteristics are involved in financial misreporting behavior and discuss the implications for accounting research and practice.

Hypothesis: For BU [Business Unit] controllers, we expected that hMNS [human mirror neuron system] functionality predicts controllers’ vulnerability to the social pressure to misreport exerted by BU managers.

An important characteristic of the role of BU controllers is the combination of local (to support their BU managers in operational and strategic decision making) and functional (fiducary duty) responsibilities.

Method: N=29 study with 3 scenario’s x 2 contexts (managers’ personal/ self-interest, or organizational interest).

EEG: Individual levels of hMNS functionality can be observed in electroencephalogram (EEG) recordings of brain activity (…) The associated weakening of the EEG signal is called mu suppression. Mu suppression has been shown to be a robust and valid indicator of hMNS functionality (…) lower values indicate more “mirroring”, associated with higher levels of sensitivity to others’ emotions.

For example scenario below, correlation between cooperation and MU: r = .406, p = .029


Result: Our findings indicate a strong association between hMNS functionality and controllers’ inclination to yield to BU managers’ pressure to misreport when this pressure stems from BU managers’ personal interests rather than from managers’ concerns with organizational interests.

our study suggests that emotional influence may cause excessive alignment between the interests pursued by the BU manager and those served by the reporting behaviors of the BU controller. In designing internal control structures, organizations need to be aware of the reporting risks associated with the expansion of “business partner” controllers.

Week van Wilte in Tweets #31

Door vakantie een paar weken over geslagen voor #wvwit. Ook minder getweet. Hierbij een “weken van Wilte in tweets”.

Search for Yield

“Door de lage rente op spaargeld zijn consumenten op zoek naar alternatieven met een hoger rendement, waardoor ze ook meer risico kunnen lopen.” schrijft de AFM in haar Agenda 2017. Spaarrentes die naar nul gaan dragen daar aan bij. Zie ook Negatieve spaarrente en spaargedrag met Mark Pooters, ESB 101(4732), 14 april 2016, p.272. [pdf]. DFT: Spaargeld gaat naar kluis en Z24 hierover Negatieve spaarrente? Dan stopt een derde van de spaarders geld in een kluis.

Hoe hoog de (nominale) rente is (of voorgespiegeld risicovrij rendement) bepaalt ook de risico-inschatting/vermogens-allocatie, blijkt uit interessant consumentenonderzoek uit Harvard.


AFM optredens

Mijn collega Jeroen van den Bosch zat in een webinar van ABP over de pensioenpot. Daarin maakte hij ook mooie reclame voor de gedragsdeskundigen bij de AFM. Job van Wolferen en ik namen recent een filmpje op over gedragswetenschappen bij de AFM (, binnenkort te zien. En Online Dialogue (bedrijf van Bart Schutz) schreef ook wat over EUropean COngress of Psychology, waar ik ook sprak (mijn slides)

Niet van de AFM, maar wel relevant voor de discussies over eigen verantwoordelijkheid versus paternalisme:

Webstats & belegginskosten

Nu ook blogpost over werk van FCA naar surfgedrag beleggers en hun kostenbewustzijn. Intentie (kosten zijn echt heel belangrijk bij mijn beslissing) strookt niet met gedrag (weinig pageviews voor pagina’s met kosten, bijna niemand sorteert beleggingen op kosten).

Ander interessant onderzoek

Nieuwe hobby

Spotify playlist met een bepaald thema maken. Zo heb ik al “fruit”, “dag van de week”, “3G” (drie dames), “herhalende bandnaam”. Ook leuk voor quizzes denk ik.

Coole filmpjes

Low Interest Rates and Risk Taking: Evidence from Individual Investment Decisions

Low Interest Rates and Risk Taking: Evidence from Individual Investment Decisions (July 2017) Chen Lian, Yueran Ma, and Carmen Wang. SSRN version. My summary is from earlier, 2016 version.


In recent years, interest rates reached historic lows in many countries. We document that individual investors “reach for yield,” that is, have a greater appetite for risk taking when interest rates are low. Using an investment experiment holding fixed risk premia and risks, we show that low interest rates lead to significantly higher allocations to risky assets, among MTurk subjects and HBS MBAs. This behavior cannot be easily explained by conventional portfolio choice theory or by institutional frictions. We then propose and test explanations related to investor psychology. We also present complementary evidence using historical data on household investment decisions.

We provide evidence that individual investors “reach for yield”, that is, have a greater appetite for risk taking in low interest rate environment (…) We find significantly higher allocations to risky assets in the low rate condition.

Experiments (N=400) with 2 groups, allocate $100.000 between ;
[groep 1] risk free = 5% vs risky asset = 10%
[groep 2] risk free = 1% vs risky asset =6% (investment horizon = 1 year).
We show that individuals demonstrate a stronger preference for risky assets in their investment decisions when the risk-free rate is low. (…) The difference is about 7 to 9 percentage points, on a basis of roughly 60% allocations to the risky asset.


Why? (what mechanisms?)

  • People may form reference points of investment returns. we find that there is significant reaching for yield behavior when interest rates are below 3%, whereas investment decisions are not significantly different when interest rates are above this level. This cut-off seems consistent with the level of interest rates that most participants are used to prior to recent years
  • Salience of the higher average returns on the risky asset in different interest rate environment. Most simply, 6% average returns relative to 1% risk-free returns is more salient than 10% average returns relative to 5% risk-free returns. Reaching for yield behavior is dampened if investment returns are completely framed in gross terms (e.g. instead of saying 5% returns, we say that one will get 1.05 units for every unit of investment).


In the 2017 version they made the graph that I had made myself in my 2016 summary:


Section 5: Suggestive Evidence from Observational Data: the data suggest that portfolio shares of stocks and flows into risky assets increase (while portfolio shares of safe assets and flows into deposits fall) when interest rates decrease. (p.28)

  • In terms of magnitude, a one percentage point decrease in interest rates is associated with about 1.5 percentage points increase in allocations to stocks and a similar size fall in allocations to “cash”.
  • Interestingly, the magnitude of allocations’ response to interest rates seems to be similar in the experiment and in the observational data. (p.29)
  • We see that across different data sources, decreases in interest rates are associated with flows into risky assets and out of safe interest-bearing assets. (p30)
  • we hold the findings in this section 5 to be merely suggestive and complementary to our experimental evidence, yet we are intrigued that data across several different sources show consistent patterns.


Other interesting bits:

  • P1: A number of papers also provide empirical evidence that banks, money market mutual funds, and corporate bond mutual funds invest in riskier assets when interest rates are low (Maddaloni and Peydr_o, 2011; Jim_enez, Ongena, Peydr_o, and Saurina, 2014; Chodorow-Reich, 2014; Hanson and Stein, 2015; Choi and Kronlund, 2015; Di Maggio and Kacperczyk, 2016).
  • footnote 1, p1: The \reaching for yield” behavior we study in this paper, most precisely, is that people invest more in risky assets when interest rates are low, holding constant the risks and excess returns of risky assets.
  • Footnote 3, p5: For example, Di Maggio and Kacperczyk (2016) and Choi and Kronlund (2015) show that money market mutual funds and corporate fund mutual funds who reach for yield get larger in inflows, especially when interest rates are near zero. These inflows most likely come from yield seeking end investors. It seems plausible that households’ yield seeking behavior could be an important cause of some financial institutions reaching for yield.
  • P5: our evidence on risk taking and interest rate environment may also have implications for security design and consumer protection, as households’ biases could be exploited by institutions and asset managers that highlight returns and shroud risks (C_el_erier and Vall_ee, 2016).
  • P10-11 In our data, Harvard Business School MBAs and MTurk workers reach for yield by a similar degree. Nor do we find that reaching for yield declines with wealth, investment experience, or education among MTurks, or with investment and work experience in finance among MBAs
  • P32 The impact of the interest rate environment on investor behavior could have important implications for connections between key macroeconomic issues and capital market dynamics and financial stability.

The Psychology of Advertising [Book]

The Psychology of Advertising by Bob M. Fennis & Wolfgang Stroebe.

My rating: 3 of 5 stars

A book written because there was no good book on this topic. A primer on persuasion for advertising people (and text book for university); Elaboration Likelihood Model (ELM) by Petty, and Ajzen. Not yet definitive answer to Chapter 6’s title “How advertising influences buying behavior”


Alpha strategies: approach motivation – Omega strategy: avoidance motivation (p.11).

How advertising works: what do we really know? Vakratsas & Ambler – The Journal of Marketing, 1999.

p36 DAGMAR model (Defining Advertising Goals for Measured Advertising Results),
9 effects of advertising in hierarchical order:

  • Category need
  • Brand awareness
  • Brand knowledge/comprehension
  • Brand attitude
  • Brand purchase intention
  • Purchase facilitation
  • Purchase
  • Satisfaction
  • Brand loyalty

p80-81 Four stages involved in the process of information acquisition and processing:

  1. preattentive analysis
  2. focal attention (salience, vividness, novelty)
  3. comprehension
  4. elaborative reasoning

View all my reviews

Week van Wilte in tweets #30

Weer loop ik achter. Volgende week is er geen wvwit, dus ik verwacht dat #31 op tijd is, op maandag 24 juli. Met dit keer in #30: Psychologencongres, FCA jaarverslag, Pensioen, Schoolfotoschadevergoeding en Shortsellregister.


Binnen een week had Bart Schutz een sessie in elkaar gezet voor het European Congress of Psychology. Ook ik mocht er wat vertellen.

Goede opkomst, ondanks het feit dat het last-minute was en niet in het gedrukte programma stond

Veel discussie over ethiek

Zie ook:

Financial Conduct Authority (FCA)

FCA publiceerde jaarverslag, hun jaar loopt van april tot april. Interessante punten over effectmeting. En bonussen bij de Engelse toezichthouder.


In januari dit jaar publiceerde de AFM een verkeerde versie van het short sell register, met ook geheime posities. In ESB een artikel van wetenschappers die het effect op de markt onderzochten van deze nieuwe informatie.


Gebeurde ook weer allerlei relevante dingen

Nadere informatie over het Blackrock onderzoek waaruit bleek dat 52% Nederlanders geen werknemerspensioen opbouwt


Ik begrijp de uitspraak niet en ben het helemaal met Sywert van Lienden eens.

En ik volg dus niet de redenering van NRC

Ook de taalpuristen zien fouten in NRC commentaar

Week van Wilte in tweets #29

Enigszins slipping, nu pas woensdagavond dat ik vorige week in tweets samenvat.

Ethisch dilemma

Ben er nog niet uit wat ik zou doen. Wel interessante casus

Limieten van de markt

Interessant interview met Paul de Grauwe. Mijn review van zijn boek De limieten van de markt. Goed en genuanceerd boek (maar na lezen interview heb je ook wel beeld van zijn standpunten).

Boete Google

Ik ben het wel eens met Voorhuis.

Neuro skepsis

Unrelated, maar Twitteraar @Neuro_Skeptic is zeker volgen waard.

Wetenschappelijk discours

en over peer review:


Beleggen en webbezoek

Interessante cijfers van de FCA over wat bezoekers op de website van hun broker doen. Lijkt niet erg kostenbewust.