In a recent blog post, Adam Land and Stefan Hunt pose the question, how can we help people get a fair deal from consumer markets?
Remedies (or interventions) can be applied to consumer markets and the businesses that operate in them, to make them fairer for consumers and improve their competitiveness. Over the past couple of years, members of the UK Competition Network (UKCN), in a project led jointly by the Competition and Markets Authority (CMA) and Financial Conduct Authority (FCA), have been working together to review how these interventions are devised, tested, and monitored, and how well they work in the real world.
On 1 October 2018 the CMA published a paper outlining the results of their review, and also hosted a conference, which was chaired by NIBS Co-Investigator, Amelia Fletcher. The conference included keynote talks from Professor David Laibson of Harvard University, Chris Woolard of the FCA and Professor Lauren Willis of Loyola Law School in Los Angeles, with contributions from many agencies such as Citizen’s Advice, the Behavioural Insights Team, Money and Mental Health, Open Banking and Which?.
The review showed that it’s often not enough simply to provide people with a large amount of information and expect them to solve everything by themselves. Having too many options can lead to a 'choice overload' and this phenomenon has been explored by other researchers in the NIBS project, including Robin Cubitt and Chris Starmer. The CMA therefore came up with the following principles to help guide future decisions:
- understand the problem and underlying causes - do interventions need to change the behaviour of firms and/or consumers?
- be bold in identifying possible options and don’t rule out radical solutions too quickly
- let consumers stay in control but provide them with the tools and support they need to make good decisions
- learn from experience in the private sectior and seek to channel commercial incentives for the greater good
- test the remedy, as initial assumptions about how people will react might be wrong
- think about the real-world impact and use modern communication to explain and advocate the change
- review how interventions really worked in practice and learn from the past to improve the future.
Read the full blog post on the CMA's website.
Adam Land and Stefan Hunt are members of the NIBS Advisory Group.
Posted on Wednesday 5th December 2018