Economic Decision Making and Policy Choices in a Changing World

Doing policy-relevant economic research to improve the wellbeing of society
We investigate the foundations and implications of economic decisions to inform the design of economic institutions and policy choices in today’s ever-changing world.

Our research ranges from basic social science projects that provide intellectually transformative knowledge, to applied projects where we work directly with stakeholders to translate our research into real life applications that improve people’s wellbeing and reduce disadvantage.

Our research program investigates economic dynamics on the “macro” and the “micro” levels and encompasses theory, data analysis, and experimental methods.

Our macroeconomists research monetary policy at zero interest rates, the implications of demographic changes for retirement income policies, the impact of policy on housing affordability, and the optimal design of fiscal policy for business cycle stabilization.

Our microeconomists investigate the foundations and implications of decisions made individually and collectively in a competitive or cooperative manner.

Think of any real-life situation where the decisions people make have an impact on themselves and perhaps also on others – this is what our research focuses on.

This research is important because policy, firms’ decisions, and unpredictable external shocks (such as financial crises or pandemics) have an impact on how people behaviourally respond to them.

By uncovering the nature and underpinnings of human behaviour, we can predict what market design, pricing strategy, or macroeconomic policy will be successful and how to best manage the economy under changing conditions.

The diverse stakeholders we work with include the Reserve Bank of Australia and other central banks around the world, the Treasury, the NSW government, banks, Universities Admissions Centre, ministries of education, health, welfare, and blood banks around the world, Sydney Opera House, local health districts, Royal Prince Alfred hospital, museums and the online gaming industry.

Where decisions relate to individuals, we investigate the reasoning underlying their choices, whether this is a mundane choice between taking the bus or using a ridesharing company, or a more far-reaching choice about whether to pursue a demanding career.

We research people’s beliefs, desires, and economic preferences, and how these cohere together. We uncover anomalies in behaviour and explain why they occur.

We study the role that risk attitudes, self-control, and cooperativeness have for real life problems such as addiction, obesity, and anti-social behaviour.

A fundamental theme in our research is the recognition that incentives (not necessarily financial) play a major role.

We produce research that informs firms about the optimal pricing schemes under different market structures as well as the optimal incentive schemes for employees to maintain a healthy and productive work environment.

In today’s world, many companies (e.g., Microsoft and Google) face the dilemma of reaching an effective organisational structure without undermining the collaboration among their workforce. Our research examines the trade-off between competition and collaboration and its implications for organization design.

Online dispute resolution, likely to become the future of conflict resolution, brings exciting new questions to address. Our research investigates how an online platform needs to be organized and designed to give appropriate incentives to negotiators to reach peaceful, quick, cost-effective, and ideal resolutions to disputes emerging in business, family, international, and political conflicts.

We do cutting-edge research on the design of optimal market institutions with the goal of identifying real-world problems and finding optimal practical solutions that have direct policy implications.

Examples include designing optimal auctions for radio spectrum, online advertising, energy, procurement, financial securities, IPO, anti-pollution and perishable items such as fish, and the design of centralized clearinghouses such as residency matching programs, school choice plans (that oversee the assignment of thousands of students within a district); designing platforms for efficient organ exchange systems, and algorithm design for the assignment of millions of high-school graduates to universities around the world (e.g., Australia and China).