Behavioural Economics and Practicalities of Intervention - Introduction
Welcome to the next lesson of this module where we will cover the topics surrounding behavioural economics.
Behavioural economics considers the ways that aspects of human behaviour can impact on the economic systems we observe. Thus, it considers matters of psychology as well as sociology.
Initially discussed are the effects on consumer behaviour in terms of prospect theory regarding economic/financial decision making, followed by behavioural finance which considers wider behaviours. This touches upon the role of public bodies, who are responsible for deciding the investment of public money and thus have crucial decisions to make.
A discussion of intertemporal choice introduces the need to consider that decisions need to take into account the influence of time, as this factor may delay the outcomes/payouts of a choice and thus disassociate the cost and result.
In relation to the above matters, public choice theory is also discussed and is related to the impact of pressure groups and activists. This area considers how behaviour takes a role in the management of public bodies and wider political issues.
Evidently, this is a broad area and covers a range of topics - this is due to the widespread effects of human behaviour and thus the varied impacts that it may have on economic systems.
Below are some goals and objectives for you to refer to after learning this section.
Goals for this section
- To understand the fundaments of behaviour in relation to economics.
To appreciate the application and importance of this concept in diverse fields.
Objectives for this section
To be able to:
- Explain the meaning of behavioural information
- Understand prospect theory, and its relevance
- Appreciate the application of behavioural consideration to finance
- Recognise the role of intertemporal choice in influencing different aspects of economic decisions making
- To understand the role of behavioural matters in regard to public bodies and political matters