ECON 2023 Lecture Notes - Lecture 16: Impulse Purchase, Behavioral Economics, Optical Illusion
7 Dec 2016
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Document Summary
View behavioral economics & neoclassical economics as complements. Conjunction to help improve understanding of human behavior. Helpful to understand how people customers behave at a shop. Not mutually exclusive: neoclassical economic at supermarket. Customers will care great deal about price. =long way toward explaining how customers behave. But sometimes cannot explain w. neoclassical economics : behavioral economics at supermarket, impulse buying. People tend to buy what they happen to see. Contradicts neoclassical assumption that consumers carefully calculate marginal utility & compare prices. Take advantage of impulse buying: location. Place not staple products at rear > increase impulse buying: shelves at eye level= highest impulse purchases. Cereal: producer prefer kid"s eye level than adult: complementary explanations at supermarket, behavioral economics. = impulse buying & other irrational behaviors: result of wide variety of underlying factors. Ongoing battle btw different areas of brain. We need both neoclassical and behavioral methods. To gure out what people are doing.
