Behavioral Economics: Crash Course Economics #27

Why do people buy the stuff they buy? In classical economics, most models assume that consumers behave rationally. As you've probably noticed in your real life, in case after case, people don't actually make rational decisions. There can be emotional or social reasons for all this irrationality, and behavioral economics tries to address this. We'll talk about risk, nudge theory, prices and perception, and the ultimatum game. So, let's get irrational, in a logical way, of course.

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[severerevenge]

The main points :
1.Bounded rationality🧠
2.Lack of information🤷
3.Manipulate non interinsic attributes of price💝
4.Framing effect💍
5.Psychological pricing👨‍🏫
6.Nudge theory😕
7.Risk(neutral & averse)🤑<😓

[Urspo]

Finally! This is the sort of economics lecture I have hoped to learn. Thank you. This explains a lot I've wondered about for years.

[afyqazraei]

a good read for this,

Thinking, Fast and Slow by Daniel Kahneman

[AndresOssa]

You guys make complicated theories look incredible easier than they are. Thanks a lot.

[andrelee]

When I started my first economics course, I thought that the basic assumptions of classical economic theory were stupid. Humans are not rational beings, just that we have the capacity for reason. Our behavior is at times predictable, meaning that the majority of us can be manipulated by others.
I feel one of the first things economics students should learn is behavioral economics (but I think it should be common sense anyway). I'm glad that Crash Course decided to make this video, so I thank you on a job well done.

[agronoxdt]

Obviously that Belt buckle falls into the category of "irrational decision"

[paulpeterson]

Corporations are masters of behavioral economics. They know what will make consumers behave irrationally and against their own interests and they capitalize on that. They know that they have an information advantage over essentially everyone, and they capitalize on that. Particularly in labor they make sure labor has less information than they do. Every boss tells you "never discuss your salary with anyone else" That's market manipulation.

[Itamar_Shai]

Def my favorite CrashCourse. Behavioral Econ and Game Theory are my favorites in Econ so far, both in Crash Course and when I study Economics in general.

[peytonwarren]

When discussing rationality in YouTube comments, make sure to keep in mind that it's not conventional rationality or logic that is being referenced in these discussions. It's simple logic, meaning a>b and b>c, so a>c. Don't go into discussions based on your ideas of common sense or rationality.

[jamesdoctor]

If you’re into this stuff, check out the paper “Prospect Theory: An Analysis of Decision Under Risk” by Daniel Kahneman, Amos Tversky. It was a game changer!

[TimePlumber]

They forgot a third attitude towards risk. If you take the envelope for more than $50, you are called Risk Seeking.

[nolanthiessen]

Public - "Pollution is killing us! Stop pollution"
Business - "We can reduce pollution but it'll increase our costs which will raise prices for consumers"
Public - "We don't want to pay."
Government - "We can force businesses by law to stop pollution"
Public - "Stop big government!"
Public - "Stop pollution!"

Yeah, people are rational.

[Javjean]

Arguably 7:29 supports cost/benefit thinking because in the experiment, food that's less convenient to reach requires more effort to get which could be considered cost. The food that is easier to reach and therefore has less "cost" seems to be more popular.

[Waltham]

Mongols are the exception to Behavioral Economics.

[empizzle]

"Only 25% fat", had me keeled over with laughter. Thank you Crash Course for another fantastic video, keep up the great work.

[DarkCloud]

I have watched all of your episodes so far and I have to say they are extremely informative. I don't know what I would have done without them. Thank you for making these

[JudodihardjoP]

My favorite field of Economics! Thanks guys, loving the work!

[TheGeniuschrist]

okay, up to this point i was undecided on crash course econ, but you guys killed it on this one. very well done.

[coconutologist]

You really found your stride in this episode. I've enjoy all of your productions, but this will be one that I'll revisit and carry with me. Thank you.

Three Wolves Moon FTW!!!

[VR_Wizard]

These two old people drinking wine ( minute 3:05 ) are one of your favourite aren't they?