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w16-17: Case 4 – Behavioural economics I /2548

>> Download and print the worksheet.

  • Read the articles below and answer the questions on the worksheet.
  • Remember that you will be marked on participation and engagement and that this contributes to your coursework grade for the module.

** Bring your completed worksheet to the tutorial (as well as the article) **

Primary reading

Fox, J (2015), From “Economic Man” to Behavioral Economics, Harvard Business Review, May

Discussion questions

  1. In what ways did Kahneman and Tversky’s initial research contradict the dominant decision making approaches of that time, and how does this relate to economics?
  2. 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 ‘Read more’ button to see this if reading online).
  3. 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’?
  4. In what ways might behavioural economics shape economics as a discipline 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 economicsHarvard 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 prospectsThe 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 buysThe Economist, 20th Dec

The Economist (2011), Not so smart nowThe 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 mathThe Atlantic, July 6th [a brief summary of some of Poundstone’s book]

Reflective question [for your w27 Reflective Journals]

Will having more realistic assumptions about how consumers make decisions produce ‘better’ economic theory?