Programmability is at the heart of ongoing work on the future of money and payments by central banks around the world. Despite its potential, there is growing concern that programmability conflicts with the provision of “good” money. This paper overviews key principles of “good” money and argues that the discourse on programmability inadequately differentiates between programmable money, which is generally negatively viewed, and programmable payments, which is generally accepted as part of the future. We provide a framework for programmable monetary systems that sharply distinguishes between programmable money and programmable payments. We show that our framework nests a broader set of financial arrangements and revisit the debate on programmability in the design of monetary systems.

This talk presents a novel theory of choice centered around the idea that exploration is at the heart of human decision-making. Through interactions with their increasingly complex environment, people and organizations learn their capabilities, strengths, and limitations. Exploration can be incentivized in two distinct ways. The first one is an innate propensity for exploration (PEX), which makes exploration intrinsically rewarding. Curiosity and boredom, evident in humans as well as animals, are emotions facilitating such rewards. An alternative approach for incentivizing exploration is the adoption of biased perceptions of reality. Unlike PEX, this approach is flexible as people, organizations, and societies can fine-tune their beliefs to achieve desired levels of exploration. Thus, biased perceptions serve the important purpose of fine-tuning exploratory behavior when inherited incentives are sub-optimal.

Numerous behavioral patterns that appear irrational at first glance, such as context-dependent choice, self-sabotage and even superstitions, could be rationalized as effective mechanisms guiding individual exploration. Exploration also provides an explanation of economic (hyper) activity. Entrepreneurs start new businesses not only because they believe they have a great idea but also because they would like to explore their abilities to develop and commercialize new ideas. Managers experiment with a new product line not only because they believe it would be profitable, but also because they would like to discover the relative advantages of their enterprise. We are designed to constantly explore an unknown and vastly mysterious world and, in the process, discover and develop who we are.

Some of these ideas are developed in the book “A Theory of Dynamic Preferences: Using Economics and Behavioral Sciences to Explore Bias, Irrationality, and Choice” published by Palgrave Macmillan, a part of Springer Nature.

An opportunity to reflect on the day and to discuss plans for the future.