What is behavioral economics: biases, nudges and desirable d

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Carlos wants good insurance for his car and hires it with the company that best suits him. Marta knows that she does not have enough savings to supplement her pension when she retires, but last Black Friday she decided to spend a significant amount of money on a top-of-the-line mobile phone. Pedro, worried about her health, planned to wear a mask when he went to the theater with his friends, but since no one was wearing one, in the end he didn't wear it either. All these examples show that there is a clear influence of psychology on the economy and that humans often do not behave or make decisions in a completely rational manner, as proposed by the postulates of classical economics, summarized in the paradigm of " homo economicus ." This paradigm assumes that humans, in our decision-making, are perfectly rational. This means that: We are able to analyze all relevant information . We know how to analyze it correctly. We choose the option that, selfishly, is most useful to us (money, pleasure, etc.) But empirical evidence shows that humans do not decide that way.



Many times we do not analyze all the relevant information, nor do we analyze it well, since we are very bad intuitive statisticians. Furthermore, we are social animals , so our decisions are influenced by what others do; hence we talk about behavioral economics. CTA Post Shortcuts of the mind and behavioral economics In our decisions, we are often guided by "heuristics", which are conscious or unconscious shortcuts that allow us to make a decision quickly, with little search for Europe Mobile Number List information , but nevertheless obtaining great precision. Using these heuristics or shortcuts works many times, but other times it causes us to make errors or biases. The so-called behavioral economics ( behavioral economics ) has identified more than 100 different biases. In the examples shown at the beginning of this article, in which we have seen the influence that psychology has on the economy, Carlos has been affected by the availability bias and, therefore, has chosen the company that most resonates with him, instead to analyze which is the best. Marta is falling into the bias of the present , exaggeratedly discounting the benefits of a pension in the long term in time and exaggeratedly valuing the usefulness of present consumption.







For his part, Pedro has succumbed to the herd effect , allowing himself to be influenced by the decisions of others. Behavioral economics , which developed from the 1970s onwards, in contrast to "classical economics", combines psychology and economics and has as its parents the Nobel Prize winner Daniel Kahneman , along with Amos Tversky . Both carried out a multitude of experiments to lay the foundations of the discipline. His book Thinking Quickly, Thinking Slowly is a best-seller that presents his contributions in an entertaining way. As a precursor is the Nobel Prize winner Herbert Simon (1956), with his concept of limited rationality . The human mind has limitations in knowledge, time and calculation capacity. We prefer to make quick, “good enough” decisions, known as “satisfactory” behavior. Psychology in economics: biases are not defects Are biases bad? Not necessarily. Gerd Gigerenzer 's "fast and frugal" approach does not consider irrational heuristic shortcuts that lead to bias and suboptimal decisions. On the contrary, biases can be a good thing and provide accurate decision results for each context with minimal effort. Furthermore, evolutionary psychologists suggest that, thanks to heuristics and biases, we were able to survive throughout our history . They are, therefore, not design defects, but design features.