MIT Sloan Professor Drazen Prelec has been awarded a 2005 Guggenheim Fellowship for his research on the interdisciplinary frontier of economics and psychology. Prelec interjects psychological reasoning into his study of consumer behavior. He believes that the traditional economic notion that people make choices by balancing the costs and benefits of alternative options overlooks prevailing personal decision-making traits.
Prelec also questions the economic assumption that people are universally impatient and prefer to have good things sooner rather than later. He probes which items people prefer to save for and which they buy on credit and whether people spend more with credit cards than they should.
Prelec's recent article in Science, entitled “A Bayesian truth serum for subjective data,” looks at the inaccuracy of such information as surveys and polls. He is developing mechanisms that will motivate people to give honest answers rather than responses crafted to please or impress the interviewer. In registering an opinion about art, for example, Prelec says that “our aesthetic judgments are often corrupted by other people's judgments.”
Rewarding honesty and originality rather than “right” answers is Prelec's idea of “truth serum.” With a foot in both the fields of economics and psychology, he is developing a pioneering theory that will result in new mechanisms for eliciting subjective information, such as forecasts, consumer preferences, and artistic and legal interpretations. “I am as much interested in what an economic toolkit can do for psychology as in what psychology can do for economics,” he says.
Prelec was one of three MIT faculty members to receive Guggenheim Fellowships for 2005. Madhu Sudan, a professor in the Department of Electrical Engineering and Computer Science, and Santosh Srinivas Vempala, an associate professor of mathematics, were also among the 186 artists, scholars, and scientists selected out of more than 3,000 applicants to the John Simon Guggenheim Memorial Foundation. A total of $7,112,000 will be awarded to this year's fellows, all of whom were appointed on the basis of distinguished achievement and exceptional promise.
The Guggenheim Foundation provides fellowships for advanced professionals in the natural sciences, social sciences, humanities, and creative arts (the one exception being the performing arts). Scores of Nobel laureates, Pulitzer, and other prize winners appear on the roll of fellows, which includes Ansel Adams, Aaron Copland, Langston Hughes, Henry Kissinger, Vladimir Nabokov, Isamu Noguchi, Linus Pauling, Martha Graham, Philip Roth, Derek Walcott, James Watson, Eudora Welty and several members of the MIT community, including Nobel-prize winning economist Paul Samuelson. Since 1925, the foundation has granted almost $240 million in fellowships to more than 15,500 individuals.