>> Download and complete the worksheet.
- Read the articles below and answer the questions on the worksheet.
Primary reading
Fox, J (2015), From “Economic Man” to Behavioral Economics, Harvard Business Review, May
Discussion questions
- What were the dominant decision-making approaches prior to Kahneman and Tversky and how did their initial research contradict these approaches?
How does this relate to economics? - Define the concept of heuristics, and explain one positive (‘helpful’) and one negative (‘destructive’) example discussed in the article – see ‘Rules of Thumb’ sidebar (Note: you may have to click on the button with an arrow to see this if reading online).
- What conclusions about decision-making – and relevance to how business and managerial decisions may be made – can be drawn from the comparative table in the article, ‘Three Decision-Making Philosophies’?
- What influence might behavioural economics (as one school of thought) have over economics as a whole over coming decades (eg will it be integrated or ignored?)
Background reading
Dworschak, M and Grolle, J (2012), SPIEGEL Interview with Daniel Kahneman: Debunking the Myth of Intuition, Speigel Online International, May 25th
Ariely, D (2009), The end of rational economics, Harvard Business Review, July-August
Ariely, D (2010), Human habits, Wired magazine, 05 May
Ariely, D (2011), We choose what we like, not what’s best, Wired magazine, 12 May
The Economist (2013a), The debt to pleasure, The Economist– Free Exchange blog, April 27th
The Economist (2013b), Future prospects, The Economist – Free Exchange blog, Aug 5th
The Economist (2013c), Nothing more than feelings, The Economist, Dec 7th
The Economist (2008), The science of shopping: The way the brain buys, The Economist, 20th Dec
The Economist (2011), Not so smart now, The Economist, Oct 20th
Kahneman, D (2011), Extract from Thinking, fast and slow, London: Penguin books
Shiller, R (2017), Richard Thaler is a controversial Nobel prize winner – but a deserving one, The Guardian, Oct 11th
Strong, C and Koutmeridou, K (2013), Behavioral economics and the customer journey, GfK, Feb 27th
Thompson, D (2012), The 11 ways that consumers are hopeless at math, The Atlantic, July 6th [a brief summary of some of Poundstone’s book]
Reflective question [for your Reflective Journals]
Is it ethical for firms to seek to exploit consumers’ behavioural biases?
