Policy makers in emerging markets and developing economies (EMDEs) can draw on new consumer and behavioral findings and research tools to develop policies that better protect financial consumers while enabling advances in financial inclusion. By seeking to understand how personal, social, and environmental factors shape human behavior, behavioral research helps to reveal why individuals do not always act as one would expect or as they themselves intended to, and sometimes not even in the way that might be best for their welfare. Years of experiments conducted by academics and practitioners have identified common behavioral biases many people face. This deeper understanding of some of the most commonly observed behavioral biases in EMDE markets also helps to identify and test new ways to improve financial behaviors and decision-making, often through relatively small changes in financial product design and delivery or regulations.
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