Invest Like the Best with Patrick O'Shaughnessy Dan Egan – Designing Better Decisions - [Invest Like the Best, EP.18]
Jan 3, 2017
Dan Egan, Managing Director of Behavioral Finance at Betterment, discusses the intersection of behavioral science and investing. He explores how sci-fi literature has influenced his thinking on social conventions and decision-making. Dan reveals innovative strategies like Tax Impact Preview that significantly improve investor behavior and reduce poor trading decisions. He shares his passion for designing systems that help people navigate financial challenges, advocating for the use of nudges instead of bans to enhance investment choices.
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Design For The Flawed Investor
- Betterment designs its product as if building for a flawed human investor, not an idealized rational one.
- The focus is on showing the right information and nudges that change future decisions, not vanity metrics like past returns.
Use Mini Tasks To Screen Candidates
- Add simple, job-relevant screening questions to applications to filter for motivated, skilled candidates.
- Expect finished application rates to fall and candidate quality to rise, then interview most who pass the filter.
Show Real-Time Tax Consequences
- Show real-time, concrete costs (like tax impact) before customers execute portfolio changes.
- Make the display mandatory after testing if it reduces harmful behavior without blocking needed withdrawals.
