Does studying economics make you more selfish? When economics students learn about what makes fellow humans tick it affects the way they treat others. Not necessarily in a good way, as Tom Stafford explains. Studying human behaviour can be like a dog trying to catch its own tail. As we learn more about ourselves, our new beliefs change how we behave. Research on economics students showed this in action: textbooks describing facts and theories about human behaviour can affect the people studying them. Economic models are often based on an imaginary character called the rational actor, who, with no messy … Continue reading How economics harms us all
Understanding the Irrational Customer: An Interview with Dan Ariely How do people make decisions? And why do they make bad ones? This is Dan Ariely’s field of expertise. The behavioral economist studies what motivates our choices and has revealed many counterintuitive results that factor into decision-making. For example, consumers are more motivated by a $3 latte than three single dollar bills. And they’ll think a product is a great deal if it is simply placed next to a more expensive one. Ariely walks us through these remarkable findings and explains the implications for marketers. We make many decisions — large … Continue reading Dan Ariely on irrationality
The Impact of Decision-Making Biases on Strategic Management Strategic management’s intellectual heritage is rooted in microeconomics and its assumptions of rational human economic behaviour. Mr Spock, the Vulcan first officer of the USS Enterprise, in the TV series Star Trek, epitomizes the concept of ‘homo economicus’ of traditional economic models. Powered by a computer-like mind, he is capable of making complex calculations and processing vast quantities of ambiguous information to support perfectly rational decisions, while still managing to keep cool in the face of unrelenting alien phaser-fire, without the slightest show of emotion. Surprisingly, however, it is not Mr Spock … Continue reading Behavioral strategic management
Don’t Let Confusion With Mortgage Lingo Cost You A recent study of US and UK home buyers, conducted by the London based Nationwide Building Society, found that more than 40% of people buying homes were confused by the jargon that lenders used to describe mortgages. When it comes to taking out a mortgage on your home, could confusing mortgage jargon be costing you money and causing you to make ill-informed choices? According to the study, only 31% of home buyers understood what the term “LTV” meant, an acronym that stands for “loan to value” and describes the ration between the … Continue reading Mortgage jargon: who needs it?
The A Priori and the Empirical Every once in a while, there is a local eruption of discussion on the a priori method, with specific reference to Mises’ praxeology. Jason Brennan, at Bleeding Heart Libertarians, discusses a recent run-in with a young Austrian and their conversation on behavioral economics and Austrian economics. Brennan makes the point that if an a priori economics cannot account for the various realities of human behavior, then its usefulness is put into doubt. I sympathize with Brennan, but I think the point can be put in another way that makes the implications a bit clearer. … Continue reading Was Hayek a behavioral economist?
Child protection, Bayes Theorem and the recent Roma child cases in Ireland The big news story in Ireland in the last couple of days has been the case of two children from Roma families being taken into care by the authorities (the Gardaí and the HSE) because they thought the children might have been abducted. It is now accepted that the children were in fact with their natural parents and have been returned. Clearly this was traumatic for the family and questions about the actions of the authorities are being raised. A related case is ongoing in Greece though it … Continue reading The Roma child case and behavioral economics
The Key to Consciousness: Efficient Information Flow? The moment a person slips from conscious thought into unconsciousness has long been a mystery. Now researchers have pinpointed exactly what goes on in the brain as people become unconscious after taking anesthesia. It turns out that there probably aren’t individual neurons, or brain cells, responsible for consciousness. “This data shows that consciousness might not be the result of a special group of neurons, but rather might be the result of how neurons communicate with one another,” study co-author Martin Monti, a psychology professor at the University of California at Los Angeles, wrote … Continue reading Consciousness as information flows