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Business & Marketing
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English (U.S.)
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Topic:
The Origins and Evolution of the Behavioralism
Essay Instructions:
For this paper, you need a cover page and the student should take that information as a base of knowledge and expand upon it by researching(at least 5 additional resources) the origins and evolution of the behavioralists. Some of the main items that you should fully address in the paper include:
Leading figures in the school of thought and their hypotheses, theories, works and awards (particularly the nobel prize).
Discussion of divergences from neo-classical theory
Framing and advertising
The endowment effect
Anchor pricing
Implications for business strategy and public policy under neo-classical and behavioralist assumptions(which would require more regulatory involvement?)
Essay Sample Content Preview:
The Origins and Evolution of the Behavioralism
Behavioral economics is one of the significant branches, which focuses on the societal, cultural, emotional, and cognitive factors based on classical economic theory (Alam, 2022). It is majorly based on the rationality of the economic agents, and it also borrows from modern microeconomics theory. However, the evolution of behavioralists has been a gradual process, and the paper addresses the origins and evolutions of behavioralists and specific behaviorist concepts.
Leading Figures in School Thoughts
Gary Stanley Becker and Herbert Simons are the two leading figures in the school of thought on behavioral economics. Herbert Simons is an American economist known for his theory. He hypothesizes that the best decision is made from various alternatives. His theory, Simon Decision making theory, provides a fundamental view of the world and decisions affecting outputs and prices (Spender, 2014). He won a Nobel Prize in economic science in 1978. The second figure is Garey Stanley, who also received a Nobel Prize in economic science in 1992 (Gary Stanley Becker, 2021). He hypothesized that investment and purchasing decisions affect economic behavior. Therefore, the two figures are leading in behavioral economics.
Divergences from Neo-classical Theory
The neoclassical theory postulates that the firm's level of investment relies on investment opportunities. However, behavioralists have divergent opinions (Madra, 2016). The main divergent aspect is that behaviorists combine investments and decision-making. Besides, psychology is required to make an independent and reliable investment decision. The neoclassical theory focuses on self-interest and well-informed decisions without considering psychology.
Framing and Advertising
Framing and advertising are significant elements of behavioral economics. According to behavioralists framing effect is based on information flow and the fact that information is not static (Alam, 2022). Therefore, the framing principle allows for effective advertisement, shaping people's purchase decisions. Framing and advertising are critical in behavioral economics since they psychologically persuade the consumers.
The Endowment Effect
Behavioralists also focus on the endowment effect. It refers to emotional bias making individua...
Leading Figures in School Thoughts
Gary Stanley Becker and Herbert Simons are the two leading figures in the school of thought on behavioral economics. Herbert Simons is an American economist known for his theory. He hypothesizes that the best decision is made from various alternatives. His theory, Simon Decision making theory, provides a fundamental view of the world and decisions affecting outputs and prices (Spender, 2014). He won a Nobel Prize in economic science in 1978. The second figure is Garey Stanley, who also received a Nobel Prize in economic science in 1992 (Gary Stanley Becker, 2021). He hypothesized that investment and purchasing decisions affect economic behavior. Therefore, the two figures are leading in behavioral economics.
Divergences from Neo-classical Theory
The neoclassical theory postulates that the firm's level of investment relies on investment opportunities. However, behavioralists have divergent opinions (Madra, 2016). The main divergent aspect is that behaviorists combine investments and decision-making. Besides, psychology is required to make an independent and reliable investment decision. The neoclassical theory focuses on self-interest and well-informed decisions without considering psychology.
Framing and Advertising
Framing and advertising are significant elements of behavioral economics. According to behavioralists framing effect is based on information flow and the fact that information is not static (Alam, 2022). Therefore, the framing principle allows for effective advertisement, shaping people's purchase decisions. Framing and advertising are critical in behavioral economics since they psychologically persuade the consumers.
The Endowment Effect
Behavioralists also focus on the endowment effect. It refers to emotional bias making individua...
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