The Irrational Consumer: Why Economics Is Dead Wrong About How We Make Choices - Derek ... - 0 views
-
Atlantic.displayRandomElement('#header li.business .sponsored-dropdown-item'); Derek Thompson - Derek Thompson is a senior editor at The Atlantic, where he oversees business coverage for the website. More Derek has also written for Slate, BusinessWeek, and the Daily Beast. He has appeared as a guest on radio and television networks, including NPR, the BBC, CNBC, and MSNBC. All Posts RSS feed Share Share on facebook Share on linkedin Share on twitter « Previous Thompson Email Print Close function plusOneCallback () { $(document).trigger('share'); } $(document).ready(function() { var iframeUrl = "\/ad\/thanks-iframe\/TheAtlanticOnline\/channel_business;src=blog;by=derek-thompson;title=the-irrational-consumer-why-economics-is-dead-wrong-about-how-we-make-choices;pos=sharing;sz=640x480,336x280,300x250"; var toolsClicked = false; $('#toolsTop').click(function() { toolsClicked = 'top'; }); $('#toolsBottom').click(function() { toolsClicked = 'bottom'; }); $('#thanksForSharing a.hide').click(function() { $('#thanksForSharing').hide(); }); var onShareClickHandler = function() { var top = parseInt($(this).css('top').replace(/px/, ''), 10); toolsClicked = (top > 600) ? 'bottom' : 'top'; }; var onIframeReady = function(iframe) { var win = iframe.contentWindow; // Don't show the box if there's no ad in it if (win.$('.ad').children().length == 1) { return; } var visibleAds = win.$('.ad').filter(function() { return !($(this).css('display') == 'none'); }); if (visibleAds.length == 0) { // Ad is hidden, so don't show return; } if (win.$('.ad').hasClass('adNotLoaded')) { // Ad failed to load so don't show return; } $('#thanksForSharing').css('display', 'block'); var top; if(toolsClicked == 'bottom' && $('#toolsBottom').length) { top = $('#toolsBottom')[0].offsetTop + $('#toolsBottom').height() - 310; } else { top = $('#toolsTop')[0].offsetTop + $('#toolsTop').height() + 10; } $('#thanksForSharing').css('left', (-$('#toolsTop').offset().left + 60) + 'px'); $('#thanksForSharing').css('top', top + 'px'); }; var onShare = function() { // Close "Share successful!" AddThis plugin popup if (window._atw && window._atw.clb && $('#at15s:visible').length) { _atw.clb(); } if (iframeUrl == null) { return; } $('#thanksForSharingIframe').attr('src', "\/ad\/thanks-iframe\/TheAtlanticOnline\/channel_business;src=blog;by=derek-thompson;title=the-irrational-consumer-why-economics-is-dead-wrong-about-how-we-make-choices;pos=sharing;sz=640x480,336x280,300x250"); $('#thanksForSharingIframe').load(function() { var iframe = this; var win = iframe.contentWindow; if (win.loaded) { onIframeReady(iframe); } else { win.$(iframe.contentDocument).ready(function() { onIframeReady(iframe); }) } }); }; if (window.addthis) { addthis.addEventListener('addthis.ready', function() { $('.articleTools .share').mouseover(function() { $('#at15s').unbind('click', onShareClickHandler); $('#at15s').bind('click', onShareClickHandler); }); }); addthis.addEventListener('addthis.menu.share', function(evt) { onShare(); }); } // This 'share' event is used for testing, so one can call // $(document).trigger('share') to get the thank you for // sharing box to appear. $(document).bind('share', function(event) { onShare(); }); if (!window.FB || (window.FB && !window.FB._apiKey)) { // Hook into the fbAsyncInit function and register our listener there var oldFbAsyncInit = (window.fbAsyncInit) ? window.fbAsyncInit : (function() { }); window.fbAsyncInit = function() { oldFbAsyncInit(); FB.Event.subscribe('edge.create', function(response) { // to hide the facebook comments box $('#facebookLike span.fb_edge_comment_widget').hide(); onShare(); }); }; } else if (window.FB) { FB.Event.subscribe('edge.create', function(response) { // to hide the facebook comments box $('#facebookLike span.fb_edge_comment_widget').hide(); onShare(); }); } }); The Irrational Consumer: Why Economics Is Dead Wrong About How We Make Choices By Derek Thompson he
-
First, making a choice is physically exhausting, literally, so that somebody forced to make a number of decisions in a row is likely to get lazy and dumb.
-
Second, having too many choices can make us less likely to come to a conclusion. In a famous study of the so-called "paradox of choice", psychologists Mark Lepper and Sheena Iyengar found that customers presented with six jam varieties were more likely to buy one than customers offered a choice of 24.
- ...7 more annotations...
-
neurologists are finding that many of the biases behavioral economists perceive in decision-making start in our brains. "Brain studies indicate that organisms seem to be on a hedonic treadmill, quickly habituating to homeostasis," McFadden writes. In other words, perhaps our preference for the status quo isn't just figuratively our heads, but also literally sculpted by the hand of evolution inside of our brains.
-
The third check against the theory of the rational consumer is the fact that we're social animals. We let our friends and family and tribes do our thinking for us
-
Many of our mistakes stem from a central "availability bias." Our brains are computers, and we like to access recently opened files, even though many decisions require a deep body of information that might require some searching. Cheap example: We remember the first, last, and peak moments of certain experiences.
-
The popular psychological theory of "hyperbolic discounting" says people don't properly evaluate rewards over time. The theory seeks to explain why many groups -- nappers, procrastinators, Congress -- take rewards now and pain later, over and over again. But neurology suggests that it hardly makes sense to speak of "the brain," in the singular, because it's two very different parts of the brain that process choices for now and later. The choice to delay gratification is mostly processed in the frontal system. But studies show that the choice to do something immediately gratifying is processed in a different system, the limbic system, which is more viscerally connected to our behavior, our "reward pathways," and our feelings of pain and pleasure.
-
the final message is that neither the physiology of pleasure nor the methods we use to make choices are as simple or as single-minded as the classical economists thought. A lot of behavior is consistent with pursuit of self-interest, but in novel or ambiguous decision-making environments there is a good chance that our habits will fail us and inconsistencies in the way we process information will undo us.
-
Our brains seem to operate like committees, assigning some tasks to the limbic system, others to the frontal system. The "switchboard" does not seem to achieve complete, consistent communication between different parts of the brain. Pleasure and pain are experienced in the limbic system, but not on one fixed "utility" or "self-interest" scale. Pleasure and pain have distinct neural pathways, and these pathways adapt quickly to homeostasis, with sensation coming from changes rather than levels
-
Social networks are sources of information, on what products are available, what their features are, and how your friends like them. If the information is accurate, this should help you make better choices. On the other hand, it also makes it easier for you to follow the crowd rather than engaging in the due diligence of collecting and evaluating your own information and playing it against your own preferences