There are Free Lunches Statement of Intentions

There are Free Lunches: Behavioral Clues to Live Happy in the Economic World is a blog that intends to present updated and relevant information about the "hidden" and only recently uncovered dimensions of the economic science: the behavioral factors. With this blog we intend to promote in Europe and in the rest of the World, the top research articles and perspectives on behavioral economics, decision making, consumer behavior, and general behavioral science. We aim to be followed by journalists, academics, managers, civil servants, and everyone who wishes to improve their daily interaction with the economic world and consequently, their lives' happiness.

Wednesday, 28 September 2011

The Price of Friendship, as Measured by Radiohead Tickets (via Freakonomics)

Radiohead is famous for doing price experiments with fans. At the height of illegal downloads, the band asked fans to pay-what-you-want for their album. They picked a small venue in New York — the Roseland Ballroom which accommodates 3,000 instead of Madison Square Garden which seats about 20,000 — and limited ticket sales to 2 per customer. But can limiting supply like this really stop a black market from emerging?

The answer is no. I checked Craigslist and there were already tons of ads. Economics tells us that limiting supply will only make price go up. I’m seeing average scalping prices right now — from $400 to $1000 for an $80 face value ticket. But what’s more interesting to me are the desperate buyers, not the sellers. Sellers just list the price they’d like for their goods, but buyers — many of whom don’t have that kind of cash — will start to barter in hopes that a seller is crazy enough not to take cash. This kind of thing is always fun for an informal study on people’s utility curve. The Gothamist has a good roundup of weird things people are offering/asking for (a soul, a date, or “priceless heirlooms or foreign treasures.”)

And of course, for a friend who’s so kind to offer me a ticket (not free, but at cost) I did the only thing I could think of: map his utility curve.

There were 2 conditions to his offer: arrive on time, and 100% commitment to going. Both of which were fine by me. I surveyed him to try to understand why he would give up $1000.

If you have 5 minutes, you can check everything here:

Sunday, 18 September 2011

The Psychology Of Yogurt (via Wired)

One of the deepest mysteries of the human mind is that it doesn’t feel like part of the body. Our consciousness seems to exist in an immaterial realm, distinct from the meat on our bones. We feel like the ghost, not like the machine.

This ancient paradox—it’s known as the mind-body problem—has long perplexed philosophers. It has also interested neuroscientists, who have traditionally argued that the three pounds of our brain are a sufficient explanation for the so-called soul. There is no mystery, just anatomy.

In recent years, however, a spate of research has put an interesting twist on this old conundrum. The problem is even more bewildering than we thought, for it’s not just the coiled cortex that gives rise to the mind—it’s the entire body. As the neuroscientist Antonio Damasio writes, “The mind is embodied, not just embrained.”

The latest evidence comes from a new study of probiotic bacteria, the microorganisms typically found in yogurt and dairy products. While most investigations of probiotics have focused on their gastrointestinal benefits—the bacteria reduce the symptoms of diarrhea and irritable bowel syndrome—this new research explored the effect of probiotics on the brain.

The experiment, led by Javier Bravo at University College Cork in Ireland, was straightforward. First, he fed normal lab mice a diet full of probiotics. Then, Mr. Bravo’s team tested for behavioral changes, which were significant: When probiotic-fed animals were put in stressful conditions, such as being dropped into a pool of water, they were less anxious and released less stress hormone.

If you have 3 minutes you can check everything here:

Friday, 16 September 2011

Self-delusion a winning survival strategy, study suggests (via World Science)

Har­bor­ing a mis­tak­enly in­flat­ed be­lief that we can easily meet chal­lenges or win con­flicts is ac­tu­ally good for us, new re­sults from sim­ula­t­ions sug­gest.

Pub­lished in the re­search jour­nal Na­ture Sept. 14, the re­search in­di­cates that over­con­fi­dence of­ten br­ings re­wards, as long as “spoils” of con­flict are large com­pared with the costs of com­pet­ing for them.

Over­con­fi­dence can br­ing suc­cess in sports, busi­ness or even war, the au­thors say. But they cau­tion that this bold ap­proach al­so risks wreak­ing ever-great­er hav­oc. They cite the 2008 fi­nan­cial crash and the 2003 Iraq war as just two ex­am­ples of when over­con­fi­dence back­fired.

“The mod­el shows that over­con­fi­dence can plau­sibly evolve in wide range of en­vi­ron­ments, as well as the situa­t­ions in which it will fail. The ques­tion now is how to chan­nel hu­man over­con­fi­dence so we can ex­ploit its ben­e­fits while avoid­ing oc­ca­sion­al dis­as­ters,” said study co-author Dom­i­nic John­son of the Uni­vers­ity of Ed­in­burgh.

The re­search­ers, from the Uni­vers­ity of Ed­in­burgh and the Uni­vers­ity of Cal­i­for­nia, San Die­go, used a math­e­mat­i­cal mod­el to sim­ulate the ef­fects of over­con­fi­dence over genera­t­ions. Their mod­el pit­ted “o­verconfident” play­ers against play­ers with ac­cu­rate per­cep­tions of their own abil­i­ties, and oth­ers that were un­der­con­fi­dent.

If you have 2 minutes, you can check everything here:

Tuesday, 13 September 2011

Ethical banking takes root in the mire of the global financial crisis (via

The financial crisis and its excesses have manured a breeding ground where new initiatives are sprouting, aimed at revolutionizing the banking world, or at least at introducing a different outlook, with a certain moral content.

Among these, ethical banking is raising its head, with statistics that show a sustained growth in clientele. The May 15 "indignation" movement has inspired thousands of people to search for alternatives to a traditional banking system that they reject. Ethical banking institutions are attracting more clients than ever, and their growth, though limited, is constant.

The ethical banking sector, composed in Spain of only five entities and somewhere more than 50,000 clients, stands for total transparency. It only invests in the real economy, finances projects related to sectors such as renewable energies and ecological agriculture, and holds social justice to be its own particular Bible.

"I looked at the list of companies I had invested in, and none of them were to my liking. It was a pleasure to tell my bank to withdraw all my investments in the stock market. Then your conscience is a lot clearer, because your money is passing through an ethical filter," says Víctor Maeso, member of an agricultural cooperative at Manresa, near Barcelona.

If you have 2 minutes, you can check everything here:

Tuesday, 6 September 2011

Behavioral Economics Arrives to Portugal!!!

If you can read in Portuguese you can read about the first Portuguese Graduate Course in the Area:ós-Graduações/Pós-Graduação+em+Psicologia+para+Decisores/

Monday, 5 September 2011

Slow down! You move too fast! (via research)

Attempts to curb speeding on the roads usually involve a mix of scary messages and the threat of fines or driving bans. But behavioural economics is starting to be applied to this social issue in creative ways.

A brilliant example from the inspirational is the speed camera lottery. If you keep within the speed limit you are caught on camera and automatically entered into a lottery to win a prize. This (in BE terms) is a classic piece of reframing: from a negative and punitive stance to a positive one – offering a reward for those who obey the rules.

Slightly more practical is the Smiley SID (Speed Indication Display) which is a traffic calming sign designed to use social norms on drivers to reduce their speed. A smiley SID rewards drivers when they obey the speed limit, while a sad SID tells them they’re going too fast. Developed as more of a gentle reminder and a non aggressive means of speed limit enforcement, SIDs are seen as the “friendly” face of community and site speed education. They have been found to be effective particularly in low-speed areas, which tend to be residential.

If you have 5 minutes you can check everything here:!-you-move-too-fast/4005749.article

Behavioral Economists Establish a Beachhead Within Obama Administration (via Bloomberg)

Peter R. Orszag, the White House budget director, plans to resign this summer, the first of President Barack Obama’s Cabinet to do so. He leaves behind an indelible mark on two of the President’s signature issues: the $862 billion economic stimulus plan and the $940 billion health- care reform law, both of which he had a major hand in drafting.

In another, less visible arena, Orszag’s imprint could be just as big. He was one of the Administration’s most prominent devotees of behavioral economics -- the study of what drives consumers to part with their money as they pick one product, retailer, or provider over another. If you give consumers better information and subtly push them in the right direction, the thinking goes, they can be coaxed, not commanded, into buying healthier foods, consuming less energy, and taking out more affordable mortgages, Bloomberg Businessweek reports in its June 28 issue.

At the Office of Management & Budget, Orszag, 41, created a team of like-minded adherents, including Cass R. Sunstein, Obama’s regulatory czar and the co-author of Nudge, a behavioralist manifesto. They have quietly established a beachhead, influencing major sections of the health-care reform law and the financial-regulation overhaul Congress is about to complete. Their handiwork can be seen in proposed rules ranging from mine safety to retirement savings, tire durability, and food labels.

If you have 3 minutes you can check everything here:

Sunday, 4 September 2011

Dissonant Debt (via

A recent US academic study that showed college students feeling “empowered” by student debt has baffled many observers.[1] In an environment of over-indebtedness and increasing joblessness, one would have thought that a student loan would be perceived as a burden. But no, according to researchers at the University of Ohio, the greater the debt the higher college students’ self-esteem. In reality, the perception of the debt load is not counterintuitive at all. If students value the education they receive, it is almost certain that they will view the debt in a positive light too.

People like to keep their beliefs consistent with one another. In earlier posts we have shown how this preference affects gang membership, fidelity in marriage[2] and church-going[3]. The same applies to the student loan: if the students believe that their studies are valuable and worthwhile, it is perfectly consistent that they see an outsized student loan as acceptable. Indeed, the higher the debt, the greater value the student is likely to attach to the education. Any other conclusion would provoke uncomfortable feelings of cognitive dissonance.

If you have 2 minutes, you can check everything here: