Behavioural economics

January 21, 2014

Behavioural economics teaches us that human behaviour is often automatic and unthinking, and is shaped far more heavily by momentary contextual factors than we realise. These contexts can be both internal and external. They include our automatic habitual responses, the heuristics or rules of thumb that we follow every day, and the constraints of the physical environment.

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In this way, the ‘unconscious’ factors that often trigger behaviour are not a pool of deep desires and feelings such as that conceived of by Freud, but an active, adaptive management system, focused on navigating life and responding to the physical environment as efficiently and effectively as possible. One frequently observed outcome is that people do not usually seek out ideal solutions; instead they ‘satisfice’, adopting choices that are ‘good enough’ but avoid them expending angst and energy seeking something better.

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‘Fridge fit’ is a well-known example of a satisficing heuristic that leads shoppers to make unexpected choices in categories like salad dressing. They choose their dressing not based on how well it fits with their beliefs about food and nutrition, but on how well
it fits into their fridge

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This approach aligns with the human brain’s inherent striving for meaning, interpreting, categorising and generally making sense of our actions for future reference.

TNS: The value of context

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