ECON 200 Chapter Notes - Chapter 23: Choice Architecture, Loss Aversion, Default Rule
2 Mar 2015
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Choice architecture- the organization of the context and process in which people make decisions. Can alter actual decisions and thus ultimate outcomes. Focuses on factors such as the timing of choices and how different options are described. Nudge- an implication of choice architecture that alters people"s behavior in a deliberate and predictable way without changing economic incentives much. A gentle push in a particular direction, but anyone who wants to go in a different direction still can. Time inconsistency- a situation in which we change our minds about what we want simply because of the timing of the decision. Status-quo bias- the tendency to stick with the current situation over other options, even when it is cheap to switch. Endowment effect- the tendency of people to place more value on something simply because they own it. Loss aversion- the tendency for people to put more effort into avoiding losses than achieving gains.
