Week 10: Behavioral Economics

How rational are we as consumers?

Rodin, The Thinker

We began this semester with the economic belief in rational behavior:

Economic actors (people or firms) given perfect-information will equalize marginal costs and benefits in making decisions, such as whether to buy something, sell something, start a business or close a business.

However as we are going to see this week, we are not that rational.  We are easily mislead by too many choices, the order of choices, time, loss vs gain decisions, and especially by the word “Free.”

Because I think you will find this interesting I have included some places where you can learn more about Behavioral Economics.

Check out these sources – OPTIONAL not required before class

Dan Ariely and Predictably Irrational

Richard Thaler and Nudge

Daniel Kahneman and Thinking, Fast and Slow

Daniel Pink and Drive

Crowd Control on National Geographic Channel

Brain Games on National Geographic Channel

Hidden Brain by Shankar Vendantam

Choice, Happiness and Spaghetti Sauce Malcom Gladwell Tedtalk

Unequally paid monkeys Frans de Waal Tedtalk

 

To do:

_____ Complete Test 2

_____ Read The Atlantic “Why you Bought that Ugly Sweater

Focus Question: What are the irrational factors guiding behavior?

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