Chapter 1: Introduction to economic psychology Flashcards
What is economic psychology?
The science of economic mental life and behavior
How is economic psychology similar to behavioral psychology?
- Both have the same historical roots
- both are empirical sciences, placing a premium on the validity of theories tested against behavioral science
- Both are applied sciences motivated to develop effective support for individuals and society
When was economic psychology as a discipline founded?
1902, with the publish ment of psychology économique
When did science became interested in MODERN economic psychology
After WOII, economist predicted recession but George Katana predicted that people were eager to buy goods, spend money and enjoy life. He was right and ultimately this resulted in the creation of the Index of Consumer Sentiment
Herbert Simon discovered what technique/process as critique on the homo economicus?
Satisficing –> people don’t maximize their profits but they set target levels above which they are satisfied
Koopmans researched inter temporal choice. What did he found?
People prefer a positive event sooner rather than later if all other things are equal
What is the endowment effect and how is it different from homo economicus?
People evaluation of the same good can vary depending on ownership. Thus people do not always maximize utility
How is economic psychology different from behavioral economics?
- EP focussed on understanding mental life
- Behavioral economics have more strict research methods and options compared to economic psychology
- Economic psychologists allow the deception of research participants
- BE is more interdisciplinary
One of the first contributions of economic psychology was research regarding money. How is this view different from a pure economists view?
Psychologists acknowledge that money is not completely interchangeable and has more functionalities than a mere tool for trade
