John Beshears

Assistant Professor of Business Administration

John Beshears is an assistant professor of business administration in the Negotiation, Organizations & Markets Unit, teaching the Negotiation course to second-year MBA students. He is also a faculty research fellow at the National Bureau of Economic Research. Before joining HBS, he was an assistant professor of finance at the Stanford Graduate School of Business.

Professor Beshears’s primary research area is behavioral economics, the field that combines insights from psychology and economics to explore individual decision making and market outcomes. He focuses on understanding how the financial decisions of households and firms are influenced by the institutional environment in which choices are made. In recent work, he has studied enrollment and portfolio decisions in retirement savings plans, health-care choices, and the performance of corporate alliances among oil and gas firms.

John Beshears is an assistant professor of business administration in the Negotiation, Organizations & Markets Unit, teaching the Negotiation course to second-year MBA students. He is also a faculty research fellow at the National Bureau of Economic Research. Before joining HBS, he was an assistant professor of finance at the Stanford Graduate School of Business.

Professor Beshears’s primary research area is behavioral economics, the field that combines insights from psychology and economics to explore individual decision making and market outcomes. He focuses on understanding how the financial decisions of households and firms are influenced by the institutional environment in which choices are made. In recent work, he has studied enrollment and portfolio decisions in retirement savings plans, health-care choices, and the performance of corporate alliances among oil and gas firms.

The National Institutes of Health, Social Security Administration, FINRA Investor Education Foundation, Russell Sage Foundation, TIAA-CREF Institute, and National Science Foundation have supported Professor Beshears’s research. His work has been published in journals including the Journal of Financial Economics, Journal of Public Economics, Journal of Economic Behavior & Organization, and Journal of Health Economics; it has also been featured in The Economist, The Wall Street Journal, BusinessWeek, and Time.

After earning his Ph.D. in business economics at HBS, Professor Beshears was a postdoctoral fellow at the National Bureau of Economic Research. He received an AB in economics from Harvard University.

  1. Overview

    Using a combination of research methods, Professor Beshears applies behavioral economics to understand how households and businesses make decisions, and how those decisions affect market outcomes. He documents the types of mistakes that individuals and firms make, and then seeks to describe the barriers to sound decision making. The resulting insights can help improve institutional design—how, for example, an employer or service provider can lower the barriers people face in making decisions that will benefit them. Professor Beshears works in three primary research areas, as described below.

    Keywords: negotiation; economics; Behavioral economics; decision making; health care; corporate alliances; Economics; Negotiation; Behavioral Finance;

  2. Household Financial Decision Making

    Individuals make many well-documented mistakes with their finances, such as not saving enough for retirement, paying too much in fees, and running up credit card debt. Recognizing that complexity is a significant barrier to financial decision making, Professor Beshears has explored how simplification can help. Looking at the retirement savings problem, he has studied a mechanism that allows employees to enroll in their employer’s retirement savings plan at an asset allocation and contribution rate pre-selected by their employer and found that enrollment increased by 10 to 20 percentage points above a standard opt-in plan. Further, the effectiveness of this mechanism increases substantially when employees are offered repeated opportunities to use it. A similar mechanism is effective in motivating employees to increase the percentage of salary that they contribute to their savings plan. These innovations work because they give people simple, understandable choices, yet without eliminating the full range of options previously available. The results suggest applications in enrolling in health insurance plans and creating advance medical directives.

     

  3. Personal Health-care Decision Making

    Using the same conceptual framework, Professor Beshears has investigated a public health puzzle: why flu shots, which are enormously beneficial to both individuals and the health-care system, are underutilized, even when offered by employers free of change at on-site clinics. In this case, the barrier is the failure of employees to focus on and prioritize getting a flu shot. Professor Beshears tested the effectiveness of a prompt designed to help people remember to get a flu shot and overcome logistical hurdles. A mailing that asked employees to write down a date and a time for getting their shots increased the vaccination rate by 4.2 percentage points above the rate of the unprompted control group.
  4. Organizational Structure and Firm Financial Performance

    Turning his attention to firm-level outcomes, Professor Beshears has used data from oil and gas drilling in the Gulf of Mexico to measure how a corporate alliance—a group of firms that jointly develops an offshore tract—performs compared with a solo firm, while controlling for the type of project under development. As a form of institutional design, the alliances were more profitable than the solo firms because they benefitted from combining their knowledge and expertise.