Today I want to talk to you about how people make decisions. Many choices in our lives have uncertain outcomes. Choosing between two alternatives often involves a risk, such as whether you should spend your birthday money on a new bicycle or on a PlayStation.
They met in a airport because of a book that one of them was reading, the same the other had recently read. The conversation was so stimulating that they decided to continue it online and share it with their readers. They both believe this will be the first of an endless series of talks about the subject—what makes people tick—that tickles them the most.
Paul Verhaeghe is a psychoanalyst and writer. That wouldn’t make him exceptionally different from other psychotherapists if his last book wasn’t about Economics, but it is. Economics? Well, to be more precise, the book is about the current western socio-economic system—Neo-liberalism—and the effect it is having on our minds and bodies.
If governments adapt to, instead of resisting, individual bias in decision-making, they can, through small, low-cost, but powerful actions, enable people to make decisions and behave in ways that will lead to their longer term well-being. The WDR15 is a very important contribution that signifies a changed reality is not so far away.
Systematic discrepancies between decision utility and experienced utility, as research in the field of behavioral decision theory has been shown, question on the idea that observed choices provide a direct measure of utility, and is revolutionizing the way we look at society and policy.
Vatsalya Srivastava is an Indian Professor who is studying Finances in the University of Tilburg – Holland. He was my colleague in the course of Behavioral Economics. When in one class, we were discussing the Economics of Happiness, I understood he had been in Bhutan, and couldn’t resist inviting him for an interview.
Economic indicators have been very important in the last decade, where our material needs haven't been completely satisfied, and our well-being has been closely related to the fulfillment of those needs.
When we are making decisions about a social problem, we should consider not only the technological and economic dimensions of the problem, but also the psychological ones. The Sweet Spot, would be the decision that optimizes the three.
Believing in a self-interested model of humanity can be partial and incomplete, but even more disturbing it can also bring to surface the worst in us, contributing to a more selfish social environment.
Adam Smith created one of the most famous ideas in economics. The brilliant Scottish economist called his idea The Invisible Hand and through its creation removed from our minds the fear of free markets theory, making people believe that the best way to regulation is self-regulation.
What is self-regulation? Self-regulation is synonymous with individual inhibition of an automatic behavior of future negative consequences, through a self-control process. Its study was initiated during the '60s by Walter Mischel, through the now famous "Marsmallow Test."