behavioral economics combining psychology & economics
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Behavioral EconomicsCombining Psychology & Economics
Rational Behavior?Traditional economics is based on the assumption that people make rational decisions where the MB ≥ MC
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11 min. Rational Behavior Video http://video.pbs.org/video/1479100777
Start at 4:30 minutes…
Behavioral Economics• Study of the social, cognitive & emotional factors which
influence economic decisions making. • Uses psychology to predict & test human behavior
Irrational Behavior?
Should Gov’t “nudge” people?
Econs vs. Humans Areas to nudge people
BEHAVIORAL ECONOMICS Re-cap
People often make irrational decisions
But these irrational decisions are predictable
People can be “nudged” to make better decisions (or worse!)
System 1 vs. System 2 Decision Making
https://www.youtube.com/watch?v=KyM3d4gQGhM
Reading:
The Truth about Relativity
http://danariely.com/videos/
1) World as it really is?
Ted Video (17 minutes)
http://www.ted.com/talks/dan_ariely_asks_are_we_in_control_of_our_own_decisions.html
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Ted Video Recap
http://www.ted.com/talks/dan_ariely_asks_are_we_in_control_of_our_own_decisions.html
Cognitive Physical Limitations vs. Limitations
Behavioral Economics Recap
1) We can’t compute the value of something alone
2) We make decisions by comparing options• We need context => everything is relative• Our decisions change by what we compare
3) We avoid hard comparisons=> • we seek things that are easy to compare
4) We admit physical limitations but not cognitive limitations
5) Irrational behavior is predictable • It occurs over & over again => we are robotic
Got Awareness?
• http://www.youtube.com/watch?v=Ahg6qcgoay4
AP Econ Course Review
Always someplace else?
• http://pulptastic.com/video-spreading-online-like-wildfire-see/
Is College Worth It?
http://finance.yahoo.com/blogs/daily-ticker/the-real-reasons-the-high-cost-of-college-is-threatening-society--filmmaker-145424431.html
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