1.2.10 Flashcards
Behaviour in markets is strongly influence by?
Social norms or social customs
What are examples of social norms?
-Changing social stigma of drink-driving and speeding
-Observing white lines in car parks
-Impact on behaviour of smoking bans in all public places
What is habitual behaviour?
People carry on behaving as they always have done
What might occur to get people to change habitual behaviour?
Compelling incentives or manadtaed choice
Why might habitual behaviour occur?
Repeat choices/purchases often become automatic as default choices don’t involve mental effort
What is anchoring?
It often sets value in our minds which we use as mental reference points
What is default option?
People are more likely to use this over other options
What is framing?
Context in which info is presented can influence choices
What is a nudge?
Changing behaviour with removing freedom of choice
What is restricted choice?
Narrow decisions
What is the nudge theory?
Flexible, modern concept in behavioural science to understand how people think, make decisions and behave.
How does the nudge theory help people?
To improve their thinking and decisions, manage all kinds of changes and identify change existing influences.
Why are motivational nudges necessary?
If you want people to care about change.
Summary of homo economicus?
-Agents chose independtly
-Agent has fixed/stable tastes/preferences
-Agent gathers complete info on all alternatives
-Make optimal choice
Summary of homo sapiens?
-Limited capacity to calculate all costs/benefits
-Strong default to maintain status quo
-Influenced by own social networks
-Loss averse
-Satisfice rather than maximise
