The Power of Experiments
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The Power of Experiments

Decision-Making in a Data-Driven World

Michael Luca and Max H. Bazerman
MIT Press, 2020
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Organizations big and small rely on experiments to test ideas, research products and services, gauge consumer response and inform decision-making. Once the purview of medicine, academia and social science, experimentation has expanded into almost every field, providing leaders with data to develop and deliver improved goods and services, upgrade practices and benefit society. Harvard Business School professors Michael Luca and Max H. Bazerman believe that the insights and advantages research provides for business, consumers and citizens outweigh the potential for misuse.

Summary

The experimental revolution is underway, changing how organizations make decisions.

When people failed to pay their taxes in the UK, they received a reminder letter from Her Majesty’s Revenue and Customs (HMRC). Many people ignored the prompt and remained delinquent. In 2010, social scientists and civil servants formed the Behavioral Insights Team (BIT) to apply behavior science to improve government functions. They experimented with the letter, testing different wording. Selected groups received slightly different versions, with dramatic results. For example, the letter with the added sentence, “By now, nine out of 10 people in your town have paid their taxes,” increased the response from 35.8% to 37.8%. This resulted in millions of pounds of back taxes paid.

BIT moved into other governmental sectors, such as policy development. By 2018, BIT had conducted more than 500 randomized controlled trials in areas such as health care, education and employment. Experiments reveal the value of products or services, and provide tangible proof to stakeholders.

Researchers craft experiments to compare the outcomes of a treatment group...

About the Authors

Michael Luca is an associate professor of business at Harvard Business School and contributes to The Atlantic, The Wall Street Journal and Harvard Business Review. Fellow Harvard professor Max H. Bazerman is the author of Better, Not Perfect and The Power of Noticing, and co-author of Blind Spots.

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