Talk at 15th EUropean Congress of Psychology in track "Behavior in a digitizing world: The biggest Psychological experiment ever" How and why (semi-) governments start to stimulate Behavioral Scientific insights & experiments. The Dutch Authority for the Financial Markets (AFM) is committed to promoting fair and transparent financial markets. As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands. In our supervision, we use a realistic perspective on human behavior, to implement potentially succesful interventions and we measure what works (ideally using randomized controlled trials). We also encourage and challenge financial firms to apply these insights and methods, in order for them to put their customers' interests first.

1. How and why (semi-) governments start to stimulate
Behavioral Scientific insights & experiments
Wilte Zijlstra
Expertise Centre, team Consumer Behavior
Netherlands Authority for the Financial Markets (AFM)
Wilte.Zijlstra@afm.nl
Twitter: @wilte

2. Outline
Dutch Authority Financial Markets (AFM)
• Realistic perspective on human behavior
• Potentially successful interventions
• Measure effect
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)2

3. 12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)
Mission
The AFM is committed to
promoting fair and transparent
financial markets.
As an independent market
conduct authority, we contribute
to a sustainable financial
system and prosperity in the
Netherlands.
3

4. AFM: focus on effect
Malcolm Sparrow
• Pick important problems
• Fix them
• Tell about it
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)4

5. Three perspectives on supervision
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)5
Decrease marktet
imperfections and raise
prosperity
Influence behavior
of market
participants
Uphold the law
1. Economic 2. Psychological 3. Legal

6. Psychology as part of supervision
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)6
https://www.afm.nl/nl-nl/professionals/nieuws/2016/okt/consumentengedrag

7. Dutch Authority for the Financial
Markets (AFM)
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)7
 Consumer Behavior Expert Team is part of the recently
(2016) established Center of Expertise
 Our team consists of economists, psychologists and
supervisory experts
 By applying behavioral insights, we aim to increase the
effectiveness and efficiency of our supervision, and
improve financial choice architecture for consumers
 Counter evil nudges
 Positive guidance for important financial decisions

8. Outline
• Realistic perspective on human behavior
• Potentially successful interventions
• Measure effect
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)8

9. Perspectives on human behavior
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)9
I am fully rational and
always make well-informed choices
I am irrational and
only do foolish things

10. Realistic perspective
on human behavior
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)10
My rationality is bounded
My preferences are not stable
My time and motivation are finite
This sometimes leads to problems
when I have to make decisions
http://www.afm.nl/nl/nieuws/2013/feb/eiopa-rapport-pensioncommunicatie.aspx
Max

11. Outline
• Realistic perspective on human behavior
• Potentially successful interventions
• Measure effect
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)11

12. Where to
intervene?
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)12
Product Distribution
Information
Fair
Financial
Markets

13. Effective interventions /
responsive regulation
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)
I. Ayres & J. Braithwaite (1992)
Intrekken
opschorten
vergunning
Boete dwangsom
Waarschuwen,
dreigen met sancties
Samenwerken inspelen op sociale controle
en heersende normen
Overtuigen, instrueren en adviseren
13

14. Pick the right tool (intervention)
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)14

15. EAST: Four Simple Ways to Apply
Behavioural Insights
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)15
http://www.behaviouralinsights.co.uk/publications/east-four-simple-ways-to-apply-behavioural-insights/

16. Outline
• Realistic perspective on human behavior
• Potentially successful interventions
• Measure effect
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)16

17. Randomised Controlled Trials (RCT)
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)
https://www.gov.uk/government/publications/test-learn-adapt-developing-public-
policy-with-randomised-controlled-trials
17
https://www.afm.nl/~/profmedia/files/brochures/2017/betrou
wbaar-gedragsexperiment.ashx?la=nl-nl
How to conduct a valid experiment?
7 steps to get insight in how consumers behave

18. Mandatory warning: Watch out!
Borrowing money costs money
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)18
https://www.afm.nl/nl-nl/professionals/onderwerpen/informatieverstrekking/kredietwaarschuwing-iv
https://www.afm.nl/nl-nl/professionals/nieuws/2016/dec/geld-lenen-geen-effect

19. € 9,630
€ 8,803
Loan amount
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)19
5.70
5.69
number of
pages viewed
No warning
2.8%
2.6%
% applied
for loan
No warning
Random
allocation
web site
visitors
N=5990
N=5897
95% Confidence Interval
N=226
N=217
38.7%
38.5%
% accepted
No warning
No warning

20. Does the credit warning work?
Our RCT found no evidence for an effect on:
• Number of pages people visit
• How many website visitors apply for a loan
• How many applications are accepted
• Requested loan amount
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)20

21. 12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)21
https://www.afm.nl/nl-nl/professionals/nieuws/2009/dec/kredietwaarschuwingszin-succes
2009: “success”
2016: “no immediate effect”
https://www.afm.nl/nl-nl/professionals/nieuws/2016/dec/geld-lenen-geen-effect

22. RCT Financial Conduct Authority (UK)
Field Trial redress letter
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)
http://www.fca.org.uk/your-fca/documents/occasional-papers/occasional-paper-2
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23. Applying behavioral insights means
… having realistic expectations of human behavior
… designing science-based interventions
… running experiments to learn about what works, and what
does not
… using this knowledge to contribute to evidence-based
policy making.
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)23

24. Take home
• Realistic perspective on human behavior
• Potentially successful interventions
• Measure effect
12 July 2017How and why (semi-) governments start to stimulate stimulate Behavioral Scientific insights & experiments - Wilte Zijlstra (AFM)24
Website: www.AFM.nl/CG
E-mail: Wilte.Zijlstra@afm.nl
Twitter: @wilte