Population Statistic: Read. React. Repeat.
Sunday, February 24, 2021

What do behavioral economists do, exactly?

Basically, they demonstrate how the straightforward rules of economic theory get mucked up when actual human beings enter into the mix, especially when social and market spheres overlap.

That’s what professor Dan Ariely does in his book “Predictably Irrational: The Hidden Forces That Shape Our Decisions”. There are several experimental examples, but basically it all boils down to this:

The fact that we live in both the social world and the market world has many implications for our personal lives. From time to time, we all need someone to help us move something, or to watch our kids for a few hours, or to take in our mail when we’re out of town. What’s the best way to motivate our friends and neighbors to help us? Would cash do it — a gift, perhaps? How much? Or nothing at all? This social dance, as I’m sure you know, isn’t easy to figure out — especially when there’s a risk of pushing a relationship into the realm of a market exchange.

To the extent that you can predict human tendencies, I’m not sure you can quantify this business-versus-pleasure dynamic. I’d guess you’d find behavior that’s deemed unacceptable in, say, St. Louis would be standard operating procedure in Mexico City.

Beyond the specific case studies, the more interesting part is probably the concept itself — economics crossed with psychology and sociology.

by Costa Tsiokos, Sun 02/24/2008 07:15:35 PM
Category: Business, Society
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