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The Psychology Behind Economic Decisions

The Psychology Behind Economic Decisions

::::::::::::::HT: TED Talks

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4 Comments

  1. Angela S says:

    Very enlightening. I’ll think twice before I buy my next pair of jeans…or car…or whatever.

  2. theophilogue says:

    Yeah … very stimulating talk huh?

    I thought one guy in the Q&A session brought out an interesting critique of some of his opinions though. Much of the cause behind our economic decisions is psychological not economic, and I don’t think he fully reckons with the value of psychological gratification/peace. He made some really great points from merely an economic standpoint, but we are human beings, and therefore we have more than mathematical economic calculations to consider.

  3. Angela S says:

    True, and the Q & A guy did have a point, but I still would argue that even though there is a sense of gratification that comes from the excitement of the possibility of winning the lottery, there is still too much to lose for the amount of joy that it brings us. In my humble opinion, losing life-savings or hard earned wages and significantly lowering one’s quality of life is a great cost to pay for a little excitement in buying a ticket. I understand that this excitement is another reason that people gamble, but if they would think more logically, they would realize the foolishness of their decision. While the speaker may have excluded this factor from his equation, his point still stands, that humans are generally illogical in their logic. It’s like my dad always says, “People are basically stupid.”

  4. theophilogue says:

    In the particular case of gambling/lottery his point still stands. But take another one of his examples … the woman who refuses to buy the same ticket twice because she lost it on the way to the play. The thought of having invested $40 when she was only expecting to pay $20 just to see a play because she lost her ticket might be enough to put her in a bad mood such that she might fail to even enjoy the play.

    This would decrease the value of the experience significantly. What the lady is paying for is not a ticket, but an experience. If after losing the ticket she perceives that she will not be able to enjoy the play as much knowing she spent $40 for it, the ticket is valued less from the standpoint of potential experience (even thought economically, it’s still the same) At that moment, her decision to skip the play may bring her some emotional relief that she wouldn’t otherwise get. Who’s to say her piece of mind isn’t worth $20 or more?

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