Questions tagged [behavioral-economics]

A branch of economics that incorporates insights from psychology by allowing for systematic deviations from idealised rational behaviour.

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49 views

Terminology for separability in price and value

Take an agent with mean-variance utility over something that is uncertain: $$ U(x) = \mu_x^\theta - \sigma_x^\lambda $$ $A\in \{0,1\}$ happens if $U(x)>0$, and $x$ is a random variable $$ A = \...
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Origin of “enforcement is only effective in the presence of the enforcer?” [closed]

If this question is off-topic, my apologies. It seems borderline to me. I have had several people tell me (without reference) this idea that: Enforcement is ineffective because enforcement will ...
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How long do stock markets usually take to process complex new public information?

Here is a question that I've been thinking about for a while: Theoretically, assuming investors are rational, a stock's price will be equal to its its intrinsic value (present value of discounted ...
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189 views

Examples of behavioural breakdowns in game theory?

I'm trying to compile multiple scenarios of the breakdown of game theory. Specifically, I'm looking for scenarios where game theory predicts certain behaviours, but in real-world scenarios or ...
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Looking for behavioral economics research about the redemption of gift cards

This is a long shot! I was wondering if anyone could point me to any behavioral economics or other economics research on perceived value, specifically I'm looking at why some people don't redeem ...
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Framing effects and the use of subjective wellbeing measures in behavioural

In my first foray into behavioural economics I have encountered two themes; - Self-reported subjective wellbeing (SWB) is commonly used as a measure of wellbeing. Survey based SWB measures are ...
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92 views

Testing if one regressor is a proxy for another

I'm reading Guiso, Sapienza and Zingales: "Trusting the Stock Market" The Journal of Finance, Vol. 63, No. 6, 2008 and have a question about how they test whether trust is a proxy for risk aversion. ...
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236 views

An example of endowment effect

Suppose a Decision Maker (DM) has willingness to pay (WTP) of 100, and her actual elicited willingness to accept (WTA) is 110, can this DM be a standard rational agent? Why or why not? My thinking is ...
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544 views

Behavioral economics and utility function

I'm not very familiar with behavioral economics, but as a recommendation of a teacher I'm reading "A Behavioral New Keynesian Model" by Xavier Gabaix. There's a part that I don't understand, here it ...
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143 views

Can lying be disincentivized without serious curtailments of free speech?

In the new age of Alternate Facts, one might argue that many actors personally benefit hugely from lying, at the expense of other sectors of society. Economically speaking you might argue that this is ...
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What is the difference between risk, uncertainty and ambiguity

I am trying to pin down the difference between risk, uncertainty and ambiguity. As I understand, when behavioral economists talk about choice under uncertainty, they mean choice when agents face ...
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72 views

Is there fundamental economical reasoning for patriotism?

Patriotism is an emotional attachment to a nation which an individual recognizes as their homeland. That is description from Wikipedia and I think it is safe to say that universally all countries ...
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323 views

Game theory vs Experimental economics

What are the main differences in the methods of game theory and experimental economics? Which method is better suited to analyze strategic behavior?
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34 views

Sources on Educational intervention changing consumer preferences?

I'm doing some research on how education can change a consumers preference for a given good or service. Im looking for more research papers or books that discuss such a topic. I've looked around ...
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Need help identifying this cognitive bias or fallacy pointed out by Kahneman in Thinking Fast and Slow

This was in Thinking Fast and Slow by Kahneman. He described a situation where someone might prefer A to B, and B to C, but then might prefer C to A (when A and C are directly compared to each other)....
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Don't let me take the last bit

I believe everyone has experienced something like the following once in her or his life : There is a cake on the table and three people to share it. The three people each eat a quarter of the cake. ...
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Why does a buyer value a dollar in a small purchase (e.g. TV) differently to a dollar in a large purchase (e.g. car)?

I am referring to how buyers will haggle over 200 when purchasing an item worth, say, 500 but not bat an eyelid paying an extra 5000 on, say, a house. I am seeking a very brief explanation of this ...
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Is there an economic rationale for wanting to know the gender of a child before it is born?

[Rewritten to express issues in economics terms:] In terms of the classic economic rational actor (Aka homo economicus) is there some rationale to want to know the child's gender before it is born. ...
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234 views

On the Ms. Exponential vs Ms. Hyperbolic vignette

I've come across this little parable purporting to show why exponential discounting is superior to hyperbolic discounting1: The greater bowing [of the hyperbolic discount curve] means that if a ...
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98 views

Has anyone studied how people's indifference curves can change?

I'm wondering if anyone has looked at how people's indifference curves can change, whether systematically due to experimental manipulations, or if they just vary due to noise. I thought about this ...
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Causes of upward trend in median first marriage age in USA?

I found a chart here of median age at first marriage by year from 1890 to 2010. It looks like it dips to a low during the 60s then has an upward trend until 2010. As an answer, I'm looking for any ...
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How to consolidate data for “single customer view”, what models to use for representing customer? [closed]

There is trend to arrive at "single customer view" - combine all the available quantitative and qualitative data about single customer. How to organize those data for using in prediction and anylsis? ...
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Is utility function used in customer data/profile analysis? What alternatives in practice?

Utility function is great theoretical concept but is it used in customer data analysis or in building customer profile (e.g. from Big data or cash register/checkout data, ecommerce history) or in ...
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406 views

Why has increased productivity over the last 100 years not affected how much people work?

If we are generally richer and more productive due to better technology and other factors, why do we still work so much? I understand that there are various incentives to work (e.g. implicit status ...
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296 views

What is the point of silent auctions?

A while back, someone decided to auction off something unique and valuable, as a silent auction: everyone would submit one bid only, and whoever bid the highest would win. I submitted a bid that I ...
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What is the percentage of free riders in public goods games?

Of all experimental public good games that have been conducted in laboratory & field settings, what is the average percentage of subjects that can be classified as free-riders (as opposed to (...
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164 views

Conceptual explanation/prediction of utility function. Extraction of utility function from Big Data

It seems to me, that utility function usually is just a set of facts. Is there a framework or model for utility function that can explain or predict utility function. I. e. if user has value for item ...
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238 views

What exactly does “carriers of utility” mean?

I understand what 'utility' mean in economics. While reading "Choices, Values, and Frames" by Daniel Kahneman I encountered above usage. I guess it means 'what utility is attributed to'. Google ...
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“omission bias” vs “action bias” — how can they be reconciled?

I'm having trouble reconciling these two biases. They seem to be the exact opposite of each other. Yet humans are allegedly pre-disposed to both. How can they be reconciled? Omission Bias: The ...
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2answers
354 views

List of behavioral economists [closed]

Even though there is a massive literature on behavioral economics, i couldn't find anywhere a list of economist that focus on that discipline. Since i am interested in environmental economics, i ...
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How does Black Friday work?

On days like Black Friday, everyone rushes out expecting huge savings on everything they buy. The level of demand seems to reach ludicrous levels, and one would expect smart merchants to react by ...
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Are there some guidelines/strategies for deciding between showing a list price vs “call for price”?

I suppose as a buyer many have been on the receiving end of "call for price" price discrimination or one of its less unpleasantly sounding synonyms. Now it's generally known that the average Joe hates ...
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100 views

Is Behavioural Economics Thymological, or does any branch or scholar concern itself with Thymology?

[Thymology] is what a man knows about the way in which people value different conditions, about their wishes and desires and their plans to realize these wishes and desires. It is the knowledge of ...
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151 views

Why do companies push users to use inferior software?

Sometimes, companies influence users in order to make them use inferior software and other services. For example, Microsoft makes it difficult to use anything other than Bing for Cortana, even though ...
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598 views

Are there two different meanings of the discount rate?

Today I suddenly became aware of how the term "discount rate" are frequently used in two different contexts: When people prefer to have something now rather than in the future. The reason is ...
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Are charitable donations on someone's behalf generally an effective incentive?

A study done in Sweden on 153 female, would-be blood donors showed surprising results. The women were divided into three groups– voluntary donation, paid donation, and paid donation with the ...
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Why do all apartment complexes in Albuquerque have pools?

Apartment builders have a constrained optimization problem whereby they balance building different amenities to attract tenants with varying preferences. Recently when searching for apartments I ...
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114 views

What does economics say about “starting from” pricing?

I was wondering what economics says about what I would call the “starting from” pricing pattern in advertising. My first question would be whether there’s a more properly defined term for it. It’s a ...
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518 views

Examples of firms using attachment bias

Are there any nice examples of firms using attachment bias to increase profits? Examples from the academic literature or well-motivated anecdotes are both acceptable. For instance, pet stores seem to ...
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Is there a “personality test” for societies? [closed]

You may have heard of the Myers Briggs personality profile test. Is there a similar test for societies? The MB has four dimensions Introversion/Extraversion iNtuition/Sensing Feeling/Thinking ...
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486 views

Tokens vs money

Recently I began thinking about why the use of tokens for money is so popular. In casinos, I think that it is well justified, but there are some cases when those arguments are not useful. For example, ...
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179 views

Random Choice interpretation

Due to McFadden Economists usually interpret Random Choice, in the population sense, as each DM being drawn from the probabilistic choice rule independently and identically. However, Psychologist have ...
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792 views

How is momentum justified as a common risk factor?

Momentum as a common risk factor? This question is partly a follow-up to another question found here. In this other question it was noted in momentum is difficult to explain as a common risk factor ...
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172 views

Tests of rational inattention

Can you provide a reference regarding a revealed preference test(s) of rational inattention models, as proposed by Sims, ergo, using a mutual information measure as the cost of putting attention. And ...
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3answers
374 views

Is technical analysis somehow a valid method for investment? [closed]

I personally think technical analysis (TA) is not useful at all but I still see lot of courses about technical analysis, and even people using it. They have the advantage of being easy to learn and ...
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Was there any use of scoring rules in economics or finance before Hanson published about LMSR?

Scoring rules arose in the field of meteorology, with the seminal paper published in 1950, but I can't find any references to their using in economics or finance until Hanson published in 2002. Half a ...
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361 views

What are the recent advancements in building a unified theory of bounded rationality?

It seems that bounded rationality models focus on explaining a particular psychological bias, in a very specific way. In particular, its seems that the state of the art consensus is that one size does ...
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How much impact does memory have on risk pricing?

Have studies been done that demonstrate the limits of human memory on reputation in the Iterated Prisoner's Dilemma? i.e. at what point (on average) does a player start to "forget" the actions of a ...

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