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Last time…

“Do you agree with the reunification of Austria with the German Reich that was enacted on 13 March 1938 and do you vote for the party of our leader; Adolf Hitler?; Yes; No”. Last time…. Major themes Power of the situation Predictable irrationality More on this in coming weeks….

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Last time…

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  1. “Do you agree with the reunification of Austria with the German Reich that was enacted on 13 March 1938 and do you vote for the party of our leader; Adolf Hitler?; Yes; No”

  2. Last time… • Major themes • Power of the situation • Predictable irrationality • More on this in coming weeks…

  3. The approach we will take • Exploring theory • What are psychological mechanisms of social and non-social behavior? • How do these compare to assumptions about behavior? • How applicable in policy contexts • Policy design • Policy implementation • Leadership and management issues

  4. A simple, yet profound fact Decisions stem not from the objective states of the world, but the individual mental representations created of those states! This is NOT to claim that all behavior is erratic and unpredictable…

  5. Introduction to Behavioral Economics 10.1.2012

  6. What is Behavioral Economics? • Blend of multiple fields • Economics • Cognitive Psychology • Social Psychology • Judgment and decision making • Behavioral decision research

  7. What is Behavioral Economics? • Typical assumptions of traditional economics not accurate • Rational • Self-interested • Consistent • Difference between “normative” and “descriptive” theories of behavior

  8. What is Behavioral Economics? A key observation of BE: Individuals are “irrational” but often extremely predictable!

  9. Understanding human behavior • Rational agent model (normative) • Well-informed • Stable preferences • Controlled and calculating • Behavioral model (descriptive) • Mediocre judgment • Malleable preferences • Impulsive *but, behavior is often predictable!!

  10. Behavioral Mapping Exercise • Step 1: Define the problem clearly *this should be tied to a specific behavior • Step 2: Identify specific roadblocks to behavior • Step 3: Brainstorm potential interventions to reduce roadblocks

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