Category: Behavioral Economics
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Sales And Consumer Protection
Peter Shawn Taylor discusses sales and consumer protection. He criticizes the Canadian Competition Bureau “for going after retailers for discounting too often” (Taylor, 2015). The piece was interesting. Sadly, Taylor’s arguments were unconvincing. Sales And Consumer Protection I’ll focus upon the general arguments rather than the specific cases. I cannot comment on the specific details…
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What Getting A Cab In The Rain Tells Us
In 1997 a collection of the great and the good on the behavioral side of economics investigated a seemingly minor question. What getting a cab in the rain tells us. Cleverly they used this minor question to consider the assumptions of traditional economics. The four authors, Colin Camerer, Linda Babcock, George Loewenstein, and Richard Thaler,…
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Hot Hands, Runs of Form and Perceptions of Randomness
World Cup [2014] post 2. It is hard to watch sport without screaming at the commentators: “what are you talking about”. I don’t say this to criticize commentators. Almost anyone forced to speak for 90 minutes straight will say a bunch of things that, to put it charitably, don’t make a lot of sense. Much…
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Deep Rationality
Rationality is a topic which you can devote years of study to without making much progress. This is because one problem is that everyone means different things by rationality. It is not just marketers disagreeing with economists, who are disagreeing with psychologists. There are also major cleavages within disciplines. One perspective from evolutionary psychologists is…
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Scarcity Theory: A Hammer, But A Good Hammer
Mullainathan and Shafir’s new book Scarcity [written in 2014] explains that people make some debatable decisions when a resource is scarce because of the stress the shortage causes. They introduce Scarcity Theory: a hammer, but a good hammer. Poverty Leads To Worse Decision-Making The authors help explain poverty sometimes encourages people to take decisions that…
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Reference Dependence In A Squash And A Squeeze
I’m interested in how to explain tricky ideas in simple language. (This was the intention of Behavioural Economics For Kids). Julia Donaldson is an useful place to start looking for ideas to help with this. She, an exceptionally successful children’s author, is excellent at conveying engaging stories with interesting messages in few words. There is…
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The Deadweight Loss Of Christmas
In a holiday theme I’m discussing the Deadweight Loss of christmas. The basic idea is that gift-giving destroys value for society. The Deadweight Loss Of Christmas When buying for myself I get what I most value with the money. When you buy something for me you don’t know what I want so probably buy something…
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Regression to the Mean
Daniel Kahneman likes to explain an epiphany he had teaching decision-making. (The story is so good you realize you’ll never come up with as perfect an illustration, but then comparing yourself to a Nobel prize winner is never good for the ego). Kahneman was instructing the Israeli Air Force. He announced that rewarding good performance…
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Kahneman’s Gripe
Marketing draws heavily on psychology and economics. I feel that both disciplines have much to offer (as well as weaknesses). So it is without any specific agenda that I agree with Daniel Kahneman’s “gripe”. Kahneman’s Gripe Agreeing with Kahnema might not seem brave. Kahneman is a Nobel prize winner. I’d say a good rule of thumb…
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A Taxonomy Of Nudging
One of the most popular ideas in the behavioural sciences at the moment is “nudging”. This is applying a light touch to encourage people towards certain actions. People often are a little unclear on what a nudge is. As such it is helpful to have a taxonomy of nudging. What Is A Nudge? What Then…
