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w23: Behavioural economics VIII /2548

Topic 3

Lecture handout

w23: Applications of behavioural economics

Main reading

Ariely, D (2009), Predictably irrational – The hidden forces that shape our decisions (revised ed), London: Harper

Duhigg, C (2012), How Companies Learn Your SecretsNew York Times, Feb 16th

Economist (2010), The data delugeThe Economist, Feb 25th

Gabaix, X and Laibson, D (2005), Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets, NBER Working paper 11755 [Published as Gabaix, Xavier and Laibson, David (2006), “Shrouded Attributes, Consumer Myopia, And Information Suppression In Competitive Markets,” Quarterly Journal of Economics, v121 (2, May), 505-540]

Huber, J and Puto, C (1983), Market boundaries and product choice: Illustrating attraction and substitution effectsJournal of Consumer Research, V10 No 1, June, pp31-44

Iyengar, S and Lepper, M (2000), When Choice is demotivating: Can one desire too much of a good thing?Journal of Personality and Social Psychology, Vol. 79, No. 6, pp995-1006

Iyengar, Sheena (2010), The art of choosing, London: Little, Brown [see her 2010 TED talk too]

Poundstone, William (2010a), Priceless: the myth of fair value (and how to take advantage of it), New York: Hill & Wang

Simonson, I and Tversky, A (1992), Choice in Context: Tradeoff Contrast and Extremeness Aversion, Journal of Marketing Research, Vol. 29, No. 3 (Aug.), pp. 281-295

Thaler, R (1985), Mental accounting and consumer choice, Marketing Science, Vol. 4, No. 3, Summer, pp. 199-214

Examples and illustration

Butler, S and Goodley, S (2015), Sports Direct: it’s all about discounts, but are they what they seem?The Guardian, Dec 10th

Clifford, S and Rampell, C (2013), Sometimes, We Want Prices to Fool UsNew York Times, April 13th

Poundstone, W (2010b), The hidden psychology of menu design, Wired magazine, April

Sullivan, B (2012), ‘Fair and square’ pricing? That’ll never work, JC Penney. We like being shafted, Red Tape Chronicles on NBC News, May 25th