The Ontario Securities Commission (OSC) is looking to make greater use of insights from behavioural economics as part of its policymaking efforts.

The OSC’s Investor Office published a report on Wednesday that reviews the work of economists who study how people actually behave in the real world vs the classical economists’ view of people as strictly rational decision makers. The report also examines the efforts of other policymakers around the world to utilize the findings of this work.

As such, the report concludes that behavioural insights have a role to play in producing better regulatory policy and indicates that the OSC plans to do more work in this area in the year ahead.

“Whether the activities are market or registrant regulation, or investor education and outreach, applying a behavioural lens to our work increases the likelihood of achieving better outcomes,” the report says. “While not a panacea, understanding human behaviour enables the OSC to better comprehend, diagnose and address ongoing problems.”

The OSC will look for opportunities to “apply behavioural insights” to both its policy work and operations, the report states. In addition, the regulator plans to carry out “pilot projects for testing using a behavioural insights lens … with a view to identifying further practical applications of behavioural insights that will lead to better investor and market participant outcomes” in the year ahead.

“It is clear that applying behavioural insights to financial policy-making and regulation has benefits for investors and market participants alike,” says Tyler Fleming, director of the OSC’s Investor Office, in a statement. “Understanding human behaviour enables regulators to better comprehend, diagnose and address market issues.”

Read: Australian regulators increasing use of behavioural economics

Read: OSC Dialogue: Guiding investor and advisor behaviour

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