Essays on Behavioral Economics

Essays on Behavioral Economics
Author: George Katona
Publisher: Ann Arbor, Mich. : Survey Research Center, Institute for Social Research, University of Michigan
Total Pages: 120
Release: 1980
Genre: Business & Economics
ISBN:

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Social and Economic Factors in Decision Making under Uncertainty

Social and Economic Factors in Decision Making under Uncertainty
Author: Kinga Posadzy
Publisher: Linköping University Electronic Press
Total Pages: 16
Release: 2017-11-16
Genre:
ISBN: 9176854213

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The objective of this thesis is to improve the understanding of human behavior that goes beyond monetary rewards. In particular, it investigates social influences in individual’s decision making in situations that involve coordination, competition, and deciding for others. Further, it compares how monetary and social outcomes are perceived. The common theme of all studies is uncertainty. The first four essays study individual decisions that have uncertain consequences, be it due to the actions of others or chance. The last essay, in turn, uses the advances in research on decision making under uncertainty to predict behavior in riskless choices. The first essay, Fairness Versus Efficiency: How Procedural Fairness Concerns Affect Coordination, investigates whether preferences for fair rules undermine the efficiency of coordination mechanisms that put some individuals at a disadvantage. The results from a laboratory experiment show that the existence of coordination mechanisms, such as action recommendations, increases efficiency, even if one party is strongly disadvantaged by the mechanism. Further, it is demonstrated that while individuals’ behavior does not depend on the fairness of the coordination mechanism, their beliefs about people’s behavior do. The second essay, Dishonesty and Competition. Evidence from a stiff competition environment, explores whether and how the possibility to behave dishonestly affects the willingness to compete and who the winner is in a competition between similarly skilled individuals. We do not find differences in competition entry between competitions in which dishonesty is possible and in which it is not. However, we find that due to the heterogeneity in propensity to behave dishonestly, around 20% of winners are not the best-performing individuals. This implies that the efficient allocation of resources cannot be ensured in a stiff competition in which behavior is unmonitored. The third essay, Tracing Risky Decision Making for Oneself and Others: The Role of Intuition and Deliberation, explores how individuals make choices under risk for themselves and on behalf of other people. The findings demonstrate that while there are no differences in preferences for taking risks when deciding for oneself and for others, individuals have greater decision error when choosing for other individuals. The differences in the decision error can be partly attributed to the differences in information processing; individuals employ more deliberative cognitive processing when deciding for themselves than when deciding for others. Conducting more information processing when deciding for others is related to the reduction in decision error. The fourth essay, The Effect of Decision Fatigue on Surgeons’ Clinical Decision Making, investigates how mental depletion, caused by a long session of decision making, affects surgeon’s decision to operate. Exploiting a natural experiment, we find that surgeons are less likely to schedule an operation for patients who have appointment late during the work shift than for patients who have appointment at the beginning of the work shift. Understanding how the quality of medical decisions depends on when the patient is seen is important for achieving both efficiency and fairness in health care, where long shifts are popular. The fifth essay, Preferences for Outcome Editing in Monetary and Social Contexts, compares whether individuals use the same rules for mental representation of monetary outcomes (e.g., purchases, expenses) as for social outcomes (e.g., having nice time with friends). Outcome editing is an operation in mental accounting that determines whether individuals prefer to first combine multiple outcomes before their evaluation (integration) or evaluate each outcome separately (segregation). I find that the majority of individuals express different preferences for outcome editing in the monetary context than in the social context. Further, while the results on the editing of monetary outcomes are consistent with theoretical predictions, no existing model can explain the editing of social outcomes.

Psychology and Behavioral Economics

Psychology and Behavioral Economics
Author: Kai Ruggeri
Publisher: Routledge
Total Pages: 481
Release: 2021-09-21
Genre: Business & Economics
ISBN: 1000449971

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Psychology and Behavioral Economics offers an expert introduction to how psychology can be applied to a range of public policy areas. It examines the impact of psychological research for public policymaking in economic, financial, and consumer sectors; in education, healthcare, and the workplace; for energy and the environment; and in communications. Your energy bills show you how much you use compared to the average household in your area. Your doctor sends you a text message reminder when your appointment is coming up. Your bank gives you three choices for how much to pay off on your credit card each month. Wherever you look, there has been a rapid increase in the importance we place on understanding real human behaviors in everyday decisions, and these behavioral insights are now regularly used to influence everything from how companies recruit employees through to large-scale public policy and government regulation. But what is the actual evidence behind these tactics, and how did psychology become such a major player in economics? Answering these questions and more, this team of authors, working across both academia and government, present this fully revised and updated reworking of Behavioral Insights for Public Policy. This update covers everything from how policy was historically developed, to major research in human behavior and social psychology, to key moments that brought behavioral sciences to the forefront of public policy. Featuring over 100 empirical examples of how behavioral insights are being used to address some of the most critical challenges faced globally, the book covers key topics such as evidence-based policy, a brief history of behavioral and decision sciences, behavioral economics, and policy evaluation, all illustrated throughout with lively case studies. Including end-of-chapter questions, a glossary, and key concept boxes to aid retention, as well as a new chapter revealing the work of the Canadian government’s behavioral insights unit, this is the perfect textbook for students of psychology, economics, public health, education, and organizational sciences, as well as public policy professionals looking for fresh insight into the underlying theory and practical applications in a range of public policy areas.

Behavioural Public Policy

Behavioural Public Policy
Author: Adam Oliver
Publisher: Cambridge University Press
Total Pages: 252
Release: 2013-10-24
Genre: Business & Economics
ISBN: 1107042631

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In this accessible collection, leading academic economists, psychologists and philosophers apply behavioural economic findings to practical policy concerns.

Behavioural Economics and Policy Design

Behavioural Economics and Policy Design
Author: Donald Low
Publisher: World Scientific
Total Pages: 214
Release: 2012
Genre: Political Science
ISBN: 9814366005

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"This book aims to demonstrate how successful policies in Singapore have integrated conventional economic principles with insights from the emerging field of behavioural economics even before the latter became popular. Using examples from various policy domains, it shows how good policy design often requires a synthesis of insights from economics and psychology. Policies should not only be compatible with economic incentives, but should also be sensitive to the cognitive abilities, limitations and biasesof citizens. Written by policy practitioners in the Singapore government, this book is an introduction to how behavioural economics and the findings from cognitive psychology can be intelligently applied to the design of public policies."--Publisher's description.

Essays in Behavioral Economics and Environmental Policy

Essays in Behavioral Economics and Environmental Policy
Author: Steven E. Sexton
Publisher:
Total Pages: 202
Release: 2012
Genre:
ISBN:

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Social planners have long relied upon non-coercive interventions in order to achieve social welfare improvements that are not obtained by markets or direct policy. Such policies are perhaps nowhere more relevant and common than in environmental economics. Environmental goods and services are typically not traded in markets because of the difficulties of property rights assignment. And yet efforts to create markets or correct market failures by coercive policy are fraught with controversy. Thus, in addition to coercive mechanisms, social planners use information provision campaigns, appeals for cooperation, and "nudges" to improve the efficiency of environmental resource allocations. Non-coercive interventions have grown in popularity among social planners as behavioral economics has gained acceptance within the mainstream of the field. Indeed, such policies typically affect market outcomes and achieve environmental goals only insofar as they can exploit or correct decision making that deviates from standard theory. In this dissertation, agent behavior is analyzed to assess the potential of non-coercive interventions to achieve socially preferred environmental outcomes. In a first essay, the concept of conspicuous conservation is introduced as a modern variant of conspicuous consumption that affords status for displays of austerity meant to signal environmental preferences rather than displays of ostentation meant to signal wealth. I identify conspicuous conservation in the automobile market and estimate a willingness to pay up to several thousand dollars for the "green" signal transmitted by ownership of the Toyota Prius. In a second essay, I demonstrate how automatic bill payment programs can induce excessive consumption of goods and services by boundedly rational consumers who exhibit inattention to prices. As automatic payment programs have spread throughout industries characterized by recurring payments, from utility and telecommunication services to insurance and loan markets, this essay is the first to consider their implications for consumer demand and welfare. It is also the first to test empirically whether enrollment in such programs increases demand, as price salience theory suggests. It is shown that residential electricity consumption increases on average 2-4.5% due to enrollment in automatic payment programs, while commercial electricity consumption grows much as 6%. Moreover, bill-smoothing programs that utilities offer to low-income households are shown to induce an 8-9% increase in electricity consumption. A final essay examines the extent to which free transit fares and appeals for car-trip avoidance reduce car pollution on smoggy days. With data on freeway traffic volumes and transit ridership, public appeals for cooperation are shown to have no significant effect on car trip demand. Free transit fares, however, do have a significant effect on car trip demand. But the effect is perverse in that it generates an increase in car trips and related pollution. Free fares also increase transit ridership. These results suggest that free transit rides do not induce motorists to substitute to transit, but instead subsidize regular transit rides and additional trips. Appeals for cooperation also have no affect on carpooling behavior. Viewed in their totality, these essays communicate the importance of behavioral theories in formulating environmental policies and predicting agents' responses to such policies. Policies formulated without due regard for agents' bounded rationality and multifaceted motivations are doomed to unintended consequeces. However, recognition of these behavioral responses and their incorporation in policy design can result in improved environmental outcomes and efficient policies.

Essays on Behavioral Economics

Essays on Behavioral Economics
Author: George Katona
Publisher:
Total Pages: 107
Release:
Genre:
ISBN: 9780783752679

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