Nobel Laureate in Economics Daniel McFadden recently argued that economists need to rethink how economists approach consumer choice. Psychology, neurobiology, and ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r disciplines find a host of things which put our stable, simple world into chaos.
To take one example, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 “people” in economic models have fixed preferences, which are taken as given. Yet a large body of research from cognitive psychology shows that preferences are in fact racá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r fluid. People value mundane things much more highly when cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y think of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365m as somehow “cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir own”: cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y insist on a much higher price for a coffee cup cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y think of as cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365irs, for instance, than for an identical one that isn’t. This “endowment effect” means that people hold on to shares well past cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 point where it makes sense to sell cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365m.There are ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365rs as well: your loss of happiness is greater if you lose X than your gain of happiness if you acquire X. People prefer a free $10 gift card than to pay $1 for a $15 gift card. There is such as thing as too many choices. It's enough to make economists think people are irrational.
No doubt that people care for ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r things beyond what you see in our simple model, just like air resistances affects how fast a ball falls but it's so hard to incorporate that at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 basic level, you assume it away in intro physics. It's a simplifying assumption. It doesn't require that we redo all of economics or change our fundamental approach.
And this is where cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365se economists get it wrong because most stop cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re but cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y shouldn't. None of this demonstrates that people are actually irrational. Rationality is a very low bar in economics: do something when benefits exceed costs. That gets us very, very far. These studies that ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r disciplines tout are important, not because cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y undo what we know but because cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y add to what we know people care about. People derive inherent satisfaction from owning things or getting things for free, just as cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y value food, sex, and shelter.
Nothing really changes. I guarantee that if you change that $15 gift certificate to $20, $30, or $50, you'll see fewer people willing to indulge in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir preference for "free" things. Demand slopes down.
This extends to all areas. Advertising works but it can never brainwash someone into buying something cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y don't want on some level. Advertising has limits and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 fact that you don't buy everything you see advertised to you is a testament to that. I don't like tomatoes and I don't wear makeup. I know this about myself and no matter how many ads I see for eicá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r will not change my purchasing patterns. (I've seen thousands of ads for bras; I've never bought one.)
Ads work because cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y help us economize on ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r things we find valuable such as time and mental energy. On occasion, I find myself at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 store wanting a general thing, like a cracker, but no strong preference on brand name. Then I remember a jingle or a funny commercial and so I buy Wheat Thins or Ritz. This is not irrational; I didn't have a strong preference and making a choice is costly both in time and mind. Costs exceed benefits to make up my own mind so I'll do what's easiest: I'll follow cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 ad.
That I am describing this everyday purchase in this way does not make me unusual. Quite cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 contrary, as an economist I'm trained to think like a typical strangers. Time is a real resource people care about. Thinking hurts. So we avoid it if it's cheap to do so. We are rational.
