6/30/2023 0 Comments Richard thaler's misbehaving![]() ![]() “A choice architect has the responsibility for organizing the context in which people make decisions.” He has since collaborated with Daniel Kahneman and Jack Knetsch to conduct a series of studies to provide empirical evidence in support of the endowment effect’s existence. In his 1980 paper, Thaler provides several examples of where this bias might occur. He developed the endowment effect to explain the irrational behavior often seen in buying and selling. He refers to these as “anomalies” and has dedicated much of his career to explaining them. Early in his career, Thaler noticed several patterns of irrational behavior that did not align with the theories of the time. The assumption was, and often still is, that people consistently make rational decisions, something Thaler feels to be unrealistic. ![]() The endowment effect is one example of how Thaler’s work challenges the predominant theories of economics. 2 It is a cognitive bias that significantly impacts our decision-making by leading us to value our possessions more than we would if we did not own them. Thaler presents the theory behind the endowment effect in “Toward a Positive Theory of Consumer Choice” (1980). ![]() ― Richard H Thaler in Misbehaving: The Making of Behavioural Economics The endowment effect – We value items more when they belong to us ![]() “Psychologists tell us that in order to learn from experience, two ingredients are necessary: frequent practice and immediate feedback.” ![]()
0 Comments
Leave a Reply. |