Behavioral economics Behavioral economics

Behavioral economics

The main tool of Behavioral economics: nudge.
EconomiaSense categoria 31 octubre, 2019 user2 0
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Behavioral economics challenges the tenets of neo-classical economics: efficient markets, perfect relationship between supply and demand and the rationality of people.

A method of economic analysis that applies psychological insights into human behavior to explain economic decision-making.

Nudges are prods that allow us to make more rational choices at the macro level.

What are the nudge in behavioral economics?

This concept was invented by the father of behavioral economics. He describes the concept in this way: “Nudge is a strategy in behavioral science, political theory and behavioral economics which proposes positive reinforcement

Brain environment interaction

and indirect suggestions as ways to influence the behavior and decision making of groups or individuals”. 

This strategy is already used in some governement like England and Canada.

Nudge allows people to be directed towards more rational and «right» choices without limiting their freedom. 


Examples of Nudge

Thanks to research on behavioral economics, we have come to understand how the human mind thinks within the economic market. 

Perhaps the most famous example of nudging in action took place in the early 1990s at Schiphol Airport in Amsterdam. Here, the airport’s designers used a simple trick to improve bathroom cleanliness. By printing the above image of a housefly on the inside of urinals, the airport significantly improved user “accuracy”: spillage on the bathroom floor was reduced by 80%!. 

The innovative ashtrays have proven to reduce cigarette litter by 46%, as measured by Southend Council in 2017. In America, environmental charity Keep America Beautiful also tested the Ballot Bins in three different sites. They measured the impact after six months and found a reduction of cigarette litter on busy streets by a whow people save money, blood donations, food health and safety in citieshopping 74%. There are a lot of type of nudge and they can improve.

Finally, behavioral economics (BE) uses psychological experimentation to develop theories about human decision making and has identified a range of biases as a result of the way people think and feel. BE is trying to change the way economists think about people’s perceptions of value and expressed preferences.


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