Investigation Of "Nudges" Richard Thaler Argues About In Behavioral Economics And Marketing

Human behavior within economics and consumer psychology has a mountainous effect regarding nudging. Behavioral economics explores what affects people’s economic decisions and the consequences of those decisions for market prices, returns, and resource allocation (Miller et al. , 2016). The aspect of choice within behavior significantly aims a person in a preferred direction. The strategies used to shape an individual perspective and principles help define the framework of a conscious consumer. Nudging people is therefore often seen as paternalistic in nature because it is associated with an assumption about which behavior is (or is not) desirable (Sunstein, 2015).

The assumption of consumers making decisions based on rationality and judgement of obligations influences the choices that are made by consumers in predictable ways, based on cognitive boundaries. The need for more effective policies when pertaining to nudges or nudging, relates to a consumer which is encouraged by a certain behavior and that person can be controlled. The lack of self-control between pleasures and consumption creates a dilemma of whether objectives of commitment venture into the improvements of human decision making. The precise definition for the field of behavioral ethics varies. Bazerman and Gino (2012) summarize the field as examining “the determinants of ethical and unethical behavior. ” Once you've answered the question, provide and discuss two examples of your own.

• A clear and defined example of a nudge that we all have experience with is the up-sell we encounter while dining within a restaurant. Servers are trained to offer the most profitable options of a meal including drinks, deserts etc. which is encouraging consumers to buy and consume what they really don’t need. They also offer extras without presenting them as such, for example, offering you a refill on a drink that doesn’t actually allow for free refills.
• Pertaining to certain businesses and positive feedback the displaying of social trust and positive reviews of a product or service enhances the favorable desire to make an unconscious decision based on others who may have previously benefited from their experiences. Some businesses only allow positive reviews to be posted on their sites to display their positive aspects and omit the negative ones in order to deter any doubt of their abilities.

What are the main disagreements between classical economists and behavioral economists? The notion of classical economics infers that people have the ability to effectively process all information with minimal interference, due to the assertion of rational thinkers. The assumptions that affect decision-making of accountability of most cognitive boundaries of what’s motivating a person is related to the impacts of a situation of relevant information, which is presented in contrast to classical economics. Behavioral economics deals with controlling a person’s behavior and understanding common decisions which are made by people. The assumption of irrational choices based on the efficiency to process all relevant information and the relationship between risk, reward and loyalty when understanding irrationality, similar to the concept of hedonic psychology. Hedonic psychology permits people to act irrationally because, for example, they fail to properly anticipate the pleasure resulting from certain actions, or because (in the intertemporal context) they fail to properly take future pleasure into account in their deliberations (Loewenstein, et al. , 2003)

The approach in which Professor Vasant Dhar alludes to, is how behavioral science should be centered on a uniform framework in relation to how system 1 consumers often act unconsciously and make quick decisions. Philip Kotler’s approach suggests how marketing has evolved and adaptation to the changing nature of customers when making a decision to purchase products based on price and their irrational motivations. How is this relatively novel method of studying marketing changing marketing research? The novel studying of the market has changed market research by the wealth of information that is gained without asking questions. Real-time information allows for trends and behaviors to reveal results of a standard traditional market where else analysis within a market is becoming more accessible. With many different changes in market research and techniques have created a shift which is challenging to effectively understand what consumers want. Technology has become an impactful platform in which data is being collected via self – reporting of surveys.

The importance of market research and capabilities emphasizes the focus of providing generalization of relationships between a company and consumers. The significant influence and objectives of performance highlight the need to better develop and understand its consumers. Research is mostly the development of operations and the direction in which a company should function. Marketing research is important because it is commonly used to assess the predictors or drivers of outcomes that include satisfaction and loyalty. The relative importance of marketing research allows for decisions made by consumers to be processed particularly in context of accuracy and reliability. Overcoming inconsistent data and limitations of traditional marketing provided by research is now more efficient. According to Goh, Heng, and Lin (2013) when uncertainty is reduced, consumers incur greater confidence in purchase-related decision making.