Freakonomics Podcast: The Maddest Men of All. Episode about Behavioral Economics

Another interesting discussion on the field of behavioral economics (see a previous post on the topic). Some really interesting discussions on this podcast about the contrast between classical economics and behavioral economics. You get some insight into the different approaches to knowledge and assumptions between two related fields in the human sciences.

You also get some interesting insights about how we make decisions. To what degree are our decisions motivated by reason? And to what degree are they motivated by emotion? Is it ethical for someone to use their knowledge of our emotional decision making to push us to make a decision they want us to make (i.e. buy something we otherwise wouldn’t)?

“Let’s take an example where you go to an airline website and it … quotes you a price for your seat to Sacramento, whatever it may be, and it says only four seats left at that price. Now, that works on me. I’ve spent eight years studying this stuff, I know it’s an attempt to exploit my scarcity bias, but it still makes me click. That’s just the way I’m wired. Now implicit in that line is that subsequent seats will be more expensive. But actually the person in their weasel wording hasn’t exactly made that promise, have they? They’ve merely said at this price. At this price is not quite clear. It could be that the subsequent four seats are being sold actually at a lower price.”

http://freakonomics.com/2015/02/26/the-maddest-men-of-all-a-new-freakonomics-radio-podcast/

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