Games and Tricks of Behavioral Economics

[maximizeutility]

Not vague, see "6,300 Dupes Want to Know: Why'd You Lie?" Wall Street Journal, May 14, 2010 De Gustibus column by Eric Felton. It describes deception in academia like the Sell the Dollar farce. Let's say I monitored your behavior for a week and then showed you the multitude of irrational things you did (by my standard, of course). I'll bet you would protest every time, "I was not irrational when I did... I simply prefer ..." Don't kid yourself. BE is now widely derided.

[savot42]

It appears to be a recurring theme with you but behavioural economic experiments have NOTHING to do with making people look stupid. Your insistence that their results occur repeatedly and regularly in reality does not invalidate their findings; and vague references to a "case" about academics and a nonsensical analogy do little to strengthen your argument. If you reject these experiments you're essentially asserting that people are completely rational, is that the case?-In reply to post on 10/06

[maximizeutility]

The Allais Paradox is a curiosity, cooked and rare. Give me an example of such a circumstance I faced in the last week. A lot of the BE research relies on tricking people, like that abominable Selling the Dollar experiment. I read about a case in which the tables were turned. Academics were asked to partake in a survey which was really just a trick to show how stupid they could be. They were NOT happy about it.

[savot42]

The only unconvincing thing here are your arguments! Can you address Allais Paradox, or is your argument that no-one would ever be offered such lotteries ... ? The "unethical tricks" of behavioural economics are only tools that allow us to analyse problems with a purely rational approach to decision making, they have flaws just like a purely rational approach but that doesn't mean either should be summarily dismissed. Also can you explain in what way you believe these experiments are unethical??

[maximizeutility]

Gwyde14,

Being on a game show is a "total experience" and motivated by many factors. Participants do not simply maximize the dollar value of the prize. In my opinion, most game show people see such an endeavor as a way of having fun, showing off how clever they are, and things like that -- maximizing utility, as we say.

Chris

[gwyde14]

Goals are varied on game shows? Arguing that people do not go onto a game show to win the big prize is very unconvincing.

[StunnedByStupidity]

There are 2 types of people that think like economists-economists (thus the results this guy got in his class) and PSYCHOPATHS!

':: Us, the psychopaths : Game theory and market democracy :: ' on youtube.

I am also at a loss to explain why working class Christians keep voting for free markets-AGAINST their interests.Why the VERY serious threat of peek oil hasn't been broached. How no one in economics thinks the world is finite and just try arguing the truth of global warming with a conservative!

[maximizeutility]

Java,

People might mess up the first time, but then they get it right ever after. The first time you ate at the company cafeteria you got in the wrong line ... and ended up buying the wrong food ... but the next 3,217 times you got just what you wanted. And traditional economics does indeed take into account first time mistakes. Part of maximizing utility is taking price (or cost) into consideration and the cost of avoiding beginner mistakes is high.

Chris

[JavaTheHub]

One must also remember that its a large difference between a rational and a rationalized choice. People are very good at make the last one, but not so good at making the fist one, and this is what behavioral economics, unlike traditional economics, takes into account.

[maximizeutility]

James,

But the vast majority of our economic decisions are made optimally. I just paid my credit card bill. It had about 50 charges on it. For none of these charges did I suffer the "theatre ticket" problem. I cannot even think on an economic transaction that I made recently where I did not get it about right, economically.

Chris

[jamesmaino]

I stopped watching after the third or so example. I am not a behavioral economist but you repeatedly make the argument that these events would not happen frequently. I think you miss the point. Reoccurring same-events, like loosing your movie ticket week after week, may not happen often. However, these events are only metaphors for similar events where we might use similar decision making criteria to arrive at similarly irrational conclusions.