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behavioural economists are interested in
the same topics that economists are
interested in why people buy how we make
decisions what are the right mechanisms
in the market and so on but the starting
point is different rather than assuming
people are rational and then take the
implications of that we have no prior
beliefs we said let's just see how
people behave let's put them in a
situation in the lab in the field let's
see how they behave and then as a
consequence let's make the implication
and because in those situations people
often don't behave rationally the
implications are often very different
from the implications from standard
economics
so they're many many examples of course
for irrationality there's one way to be
rational and many ways to be irrational
we exhibit lots of those a good way to
think about it is to think about
emotions so think about it imagine that
you were in the jungle 20,000 years ago
and you saw a tiger what do you want you
want a a human being in that situation
to stop to pause to think to take out a
little Excel spreadsheet and calculate
what should I do
should I arrange ooh they stay what's
the cost what's the benefit of course
not what you want is to click to create
a situation in which this person runs as
fast as they can the moment they see the
tiger and that's basically how emotions
work when we see something that puts us
in danger or have to do something with
the sexual behavior we turn our
cognition off it's not that we think and
we feel we just feel emotion take over
and then they just execute a command say
run as fast as you can don't think don't
calculate don't don't do anything now
emotions still work in the same way
these days even though we don't have
Tigers but now the revoke by other
things
somebody cut in front of us in the
highway we have some anger towards
somebody somebody in customer service
upsets us all kinds of other things
happen emotion just work in the same way
even though nowadays they're not as
relevant to those situation
there is hope and I think the hope
basically has kind of multiple legs to
it the first thing is that I'm hoping
that when people see a mistake that they
know about it they might be able to fix
it so for example it turns out that free
is a very big allure when we see
something that is free we often go for
it even if it's not good for us but it
turns out it if it wasn't free if it was
costing us a penny or 10 cents or a
dollar we will not have the same allure
to it so one of the suggestions I have
to people is when something is free ask
yourself would I still do the same thing
even if it was costing me a penny or 10
a 10 cents and there's a range of those
things there's a range of things in
which we can read a paper or a book or
kind of have an idea but what are some
irrational behaviors that other people
are exhibiting and of course it's always
easy for us to see what other people are
exhibiting irrationalities and then use
it as a mirror and say oh I can see this
behavior I see that when I date I juggle
too many options I see that when I shop
I make this mistake I see when I make
these mistakes and let me think about
how to prevent it so that's the first
hope the second hope is for things that
we would do that would prevent us from
getting into this mistake so for example
have you ever gone to lunch when you are
vowing to be on a diet and then the
waiter comes with the chocolate souffle
and you say today I'll have the
chocolate souffle of course we all do it
we do it repeatedly surprisingly how
repeatedly or have you ever had a
situation which you said I'm going to
only practice safe sex I really don't
want any STDs and then you come to the
moment of temptation and they thought
about condom going to get it and so on
is just not high on your priorities
happens very often now in those cases
it's not something you can at the moment
fix you can't see the chocolate souffle
or be sexually aroused and say oh let me
let me fix that I understand this is a
rational behavior so in those situation
what we need to do is to think ex ante
and try to prevent ourselves from doing
that and there's a whole range of those
things we could say I know that I don't
like to exercise so let me create
appointments with friends so that they
will force me to go I know I have a
tendency to have unprotected sex let me
have condoms with
me even if I don't think it's necessary
let me tell the waiter at the beginning
of the meal
let me ask them not to show me the
dessert tray there's all kinds of
mechanisms like
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