What is behavioral economics? (including distinction (Abgrenzung) to behaviorism and neoclassical economists)
- Behavioral economics combines elements of economics and psychology
- try to understand how and why people behave the way they do in the economic environmental
- Behavioral economics considers people as human beings who are subject to emotion and impulsivity, and who are influenced by their environments and circumstances.
This characterization draws a contrast to traditional economic models that have treated people as purely rational actors—who have perfect self-control and never lose sight of their long-term goals—or as people who occasionally make random errors that cancel out in the long run.
People do not always make what neoclassical economists consider the “rational” or “optimal” decision, even if they have the information and the tools available to do so. It differs from neoclassical economics, which assumes that most people have well-defined preferences and make well-informed, self-interested decisions based on those preferences.
Der Behaviorismus (engl. Behaviorism; von engl. behavior = verhalten) erforscht und erklärt das Verhalten von Menschen und Tieren nur mit naturwissenschaftlichen Methoden. Dabei beschränkt sich ein Behaviorist auf das von außen objektiv beobachtbare Verhalten als Reaktion auf Reize.
- Differences between "Classical Economics" and "Behavioral Economics"
Humans act rational = homo oeconomicus
-> Economists do not assume complete rationality of human behavior. However, their models are based on the assumption that deviations are unsystematic, small and hence
Humans act with limited rationality = «bounded rationality»
-> Deviations from rational behavior are substantial/major and systematic enough, hence they are predictable to develop new descriptive theories of human behaviors
- Differences between "Classical Economics" and "Behavioral Economics" regading their models
- Simplified models, complexities and deviations are ignored
- normative models (Nutzen x Auftretenswahrscheinlichkeit -> Option mit höchstem Wert hat den grössten Nutzen gemäss Modell)
- im Fokus steht der subjektive Nutzen (Entscheidungsalternativen -> welche hat den grössten Nutzen
- wie entscheiden Menschen wirklich und was gibt es für Einflussfaktoren?
- basier auf Prospect Theory (positive Ereignisse -> weniger Risiko / negative -> höheres Risiko)
- Erwartungsnutzen wird nicht als Grundlage genutzt
- Differences between "Classical Economics" and "Behavioral Economics" regading their focuses
Focus on markets, economies, competition vs. monopoly etc.
Focus on institutions and on the context in which decisions are made
Assumptions in economics: Attributes of the homo oeconomicus
- What are the attributes of the homo economicus and how is the HE used in "Classical Economics" context
- Fixed preferences
- Completely rational behavior
- Complete market transparency and foresight
- Immediate reaction to new information
- Utility maximization
- Unlimited self-control
- Classical economics accepts that the homo oeconomicus is not realistic depiction of human behavior
- Homo oeconomicus is used as a simplifying assumption in economic models
Deviations to Homo Economicus
- Altruism - How show the "Altruism" a deviation to Homo Economicus? What are exaples for "Altruism"?
The "Altruism" shows that humans do not act completely rational
Selfless behavior (e.g., donating, sponsoring and volunteering) or Stem cell donation
Deviations to Homo Economicus
- Decoy Effect - How show the "Decoy Effect" a deviation to Homo Economicus? What are exaples for "Decoy Effect"?
The "Decoy Effect" shows that humans do not have fixed preferences
Designing a product portfolio with certain product attributes and pricing (e.g. iphones)