Behavioral Economics Essay

Behavioral Economics Essay
Introduction
Behavioral economics studies cognitive, emotional and social factors effects on economic decisions made by an individuals and consequences returns,
resource allocation and market prices. It assumes that human beings are rational in the decisions they make. Behavioral economics do not involve
assumption. The difference comes in from the notion that the human behavior observation contradicts behavior of people to be perfectly rational.
Therefore, the two starts from different points. Both behavioural economics and economics try to proscribe and describe patterns of human spending.
The implication is that it does not only try to describe human behavior but tries to dictate human behavior.
Behavioral Economics
The authors draw...show more content...
From this perspective, psychology influenced an individual's decision making. Neoclassical economists rejected the psychological perspective and
adopted the behavioural perspective. The neoclassical economist stated that the behavior of one dictates ones rationality in the making of decisions
which is proscriptive. With classical economists, empirical evidence implies humans are static no matter how much they try to change their behavior.
Presently, the classical and neo classical economist have combined to achieve modern economics. It comprises of both psychological and
behavioral activities in making of decisions. A classical economic theory market is not all about demandand supply of sellers and buyers. A seller
benefits more by giving a buyer more than he needs or selling at higher prices. According to Pareto efficiency that states that the distribution in the
markets creates efficiency and both buyer and seller trades off well. This model does not benefit both parties;therefore, a more realistic model was
adopted. Hyper rational economist is one who uses ancient ideas to be a prey and a predator at the same time. This mode tries to balance the welfare
of both parties involved in the market. Both classical and neo classical shows the behavior of an individual taking into account the social, cognitive and
resource allocation and the consequences on demand and
Get more content on HelpWriting.net

New Economic Imperialism Essay example
New Economic Imperialism
Those in power define national interests as the preservation of the existing set of economic, social, and political relationships. Therefore, the national
interest of the supranational capitalist society is the interests of the upper class, allied throughout the globe. The United States capitalist class has
proposed to preserve and extend U.S. capitalism by a policy of empire building to satisfy the need for large export markets that could supply cheap
inputs and guarantee consumption.
The road to the current economic imperial structure prevalent in international affairs is a long and complicated one. During the twentieth century the
capitalist elite began forming organizations in...show more content...
Top executives from the worlds leading multinational corporations meet with top national political figures at Bilderberg meetings to consider jointly
the immediate and long–term problems facing the West. "When Bilderberg participants reach a form of consensus about what is to be done, they have
at their disposal powerful transnational and national instruments for bringing about what it is they want to come to pass." (Sklar 158) Officials from
the OECD, NATO, the IMF,World Bank, and GATT (now WTO) regularly attend. Since the members are in a position of such executive power, when
the group reaches a consensus the capitalist West is likely to act on it, more or less, as a unit.
By far the most dominant and intriguing wing of the imperialist structure has been its economic influences on the Third World. Early on multinational
corporation learned that "to assure themselves access to foreign markets on favorable terms, to arrange intricate export subsidies and insurance against
nationalization, to manipulate other governments through foreign aid and

business economics Essay
Table of Contents 1.INTRODUCTION 2.MAIN BODY 2.1THE NATURE OF RESOURCE COST STRUCTURE AND THE PRACTICAL
SIGNIFICANCE OF DIFFERENT COSTS 2.2THE FACTORS INFLUENCING OPTIMUM SIZE AND THE SIGNIFICANCE OF DEMAND AND
SUPPLY RELATIONSHIPS 2.3UNDERSTANDING OF THE RELEVANCE AND LIMITATIONS OF ECONOMIC THEORY TO MANAGE
DECISIONS 3.CONCLUSION 1.INTRODUCTION: From the economic perspective, there are a full range of wants from individuals, firms and
government but there is only a few number of resources or factors of production such as land, labour, capital and enterprise. The raw material will
come from land, taking the example of oil, gas. The labour relates to the individuals able to work. The capital covers machinery,...show more content...
Equipment, everything used to bring all the materials together, for example, cranes, welding sets, computing time, mobile offices. It is also important
to know how much money committed to spend at any point in time. 2.1.1The microeconomics perspectives: This focuses on the market behaviour of
individual consumers and firms to help understand the decision making process of firms and households. This is at a level of individual buyer and
individual seller, meaning demand and supply. How much to produce and how much to charge for it. The law of the demand is that the demand
decreases when the price increases and the demand increases when the price decreases. Also more demand of a product results in an increase of the
price the price of that product. (See graph below). 2.1.2The macroeconomics perspectives, focuses on the big picture of the national economy as a
whole and provides a basic understanding of how things work in the business environment. The macrocosmic policy goals will be achieved by the
monetary policy and the fiscal policy. The monetary policy is the management of the nation money supply, the decision of the interest rate and the
banking system to promote economic growth, lower unemployment and inflation. 2.2The factors influencing optimum size and the significance of
demand and supply relationship: The demand and the supply are two main concepts of the economy. Demand is what quantity of product or service

Economic Systems Essay
Introduction
Economic systems are organized way in which a state or nation allocates its resources and apportions goods and services in the national community.
An economic system is slackly defined as country's plan for its services, goods produced, and the exact way in which its economic plan is carried out.
There are three types of economic systems exist, they are command economy, market economy, and mixed economy. Command economy is also
sometimes called planned economy. The expectations of this type of economy is that all major decisions that related to the construction or production,
distribution, commodity and service prices are all made by the government. However, in market economy, national and state governments play a...show
more content...
Businesses can decide which goods to produce and in what quantity and consumers can decide what they want to purchase and at what price. The
role of the state is limited to ensure right precision in the prices charged by the sellers. Prices also have the function to allocate and distribute a
country's resources. Market leads to complete effectiveness bringing about the best possible distribution of a country's resources in a perfect
world. This would only happen in a state of equilibrium and there is a unique price for every commodity. But in a realistic world which is
imperfect by nature, prices are never at equilibrium and very unstable depending upon the vagaries of the market forces. This generally harms
people living below the poverty line. It is impossible for them to pay high prices in cases of demand shortage. Thus, the free market model is not a
viable option in developing countries which has a large number of poor. Besides, producers are aim to minimize profit and maximize rent of
production. Examples of countries that are using this economy system are Hong Kong, USA, and UK. Many developing countries like India and China
are moving towards totally free–market economy. The command economy is government directed. The market forces have very little say in such an
economy. There is no private property. On the other hand, a command economy aims at using all available resources for developing either

Economic Growth Essay
Economic Growth Economic growth refers to the rate of increase in the total production of goods and services within an economy. Economic growth
increases the productivity capacity of an economy, thereby allowing more wants to be satisfied. A growing economy increases employment
opportunities, stimulates business enterprise and innovation. A sustained economic growth is fundamental to any nation wishing to raise its standard
of living and provide a greater well being for all. Gross domestic product (GDP) is the monetary value of all final goods and services produced over a
year. It is the total value of production within the economy. The total value of production is the total value of the final goods or services less the cost of
...show more content...
Real GDP is measured by the following formula; [(current year quantity) x (based year price)]. A more reliable measure of economic growth is real
GDP per capita; this measurement takes into account both the total production of the nation and the total population. Real GDP per capita measures the
real income per head of the population.
This can be measured by the following formula; Per capita nominal GDP = Nominal GDP / Population, Per capita real GDP = Real GDP / Population.
Seven factors determine economic growth. Natural resources such as land, mineral deposits, waterways; climatic conditions provide an essential
foundation to economic growth. Combined with the other resources of capital, labor and enterprises, natural resources can be developed and organized
to increase the productive capacity if the nation. Consequently the quality and size of the labor force is a major determinant of economic growth.
Education and vocational training are essential the growth potential of a nation. The promotion of education and job training schemes increase the
knowledge, skills and flexibility of the workforce that contributes to potentially higher levels of productivity and efficiency. Whether from natural
increase or immigration population growth can cause a higher level of economic growth. An increasing population requires increased public spending
on housing, education and other social needs while businesses expectations of

Economic Impact Essay examples
The Economic Impact of SUVs "The SUV (Sports Utility Vehicle) is one of the most popular types of vehicle to both own and drive. Last year, SUVs
and minivans outsold conventional cars for the first time. However, the SUV is increasingly coming under attack for its fuel economy, emissions
standards and safety record. Vehiclefuel efficiency across the US is now at its lowest level since 1980. However, former California governor Gray
Davis signed legislation requiring the California Air Resources Board to develop regulations to reduce greenhouse gas emissions from passenger
vehicles. This includes SUVs. California accounts for 13 percent of the nation's auto market, so manufacturers of cars, SUVs and trucks are sure to
comply with the...show more content...
SUV drivers are also more likely to be drunk. And SUV drivers are less likely to wear their seatbelts. The Insurance Institute monitors actual driver
deaths for Highway Safety, and as you can see, the average driver death rates were lower in large vehicles but there was a significance overlap
between vehicles categories (Status, 2007).
|Model of Vehicle |# Of Models |# Of Fatalities (per million) |
|Small 4 door cars |14 |45–191 |
|Mid–size 4 door cars |17 |14–130 |
|Lrge 4 door cars |11 |57–118 |
|Md–size luxury |8 |11–54 |
|Lrge luxury |11 |14–85 |
|Lrge mini–vans |5 |36–97 |
|Vry large mini–vans

Essay about U.S. Economy
The United States economy is currently not looking very good. Over the past couple of months the economy has taken a turn for the worst and we
could be headed into a recession in the coming months or years. The biggest problems are in the real estate and mortgage markets. In 1999, housing
prices rose at huge rates and lenders began offering riskier mortgages, which caused homeowners to keep piling up huge debts. People were taking out
loans and balloon mortgage payments that they really could not afford. The problem began in late 2007, when housing prices began to fall and the
system fell apart causing huge numbers of defaults on home loans and foreclosures. Currently, 5.6% of mortgages are delinquent, the highest rate in 21
years, and...show more content...
The housing crisis that I mentioned earlier and resulting backlash through the entire economy has been building for awhile now but it has just came
into the forefront in the past couple of weeks. We really haven't faced a downturn like this since the Depression. Last Tuesday, January 22, the Dow
Jones industrial average fell almost 600 points and was already down 9% in 2008 (Gross 1). Immediately the Federal Reserve took action and cut the
interest rates three–quarters of a percentage point, the biggest cut in 24 years. Today, not even a week later, the Fed again cut interest rates, this time
by a half–point (Aversa 1). This move is an effort to keep the economy out of a recession by getting money back into the banks and encouraging
them to keep lending credit to turn the economy upward. Whether or not it will work remains to be seen in the coming months. The government
also announced another move to a couple weeks ago to help get the economy going again and avoid or slow down a recession. President Bush and
the House are currently developing a $145 billion stimulus plan that would give tax relief to citizens by sending them individual checks for $300 and
up. The plan would put over $100 billion into the hands of consumers and the government hopes that money would be spent and put back into the
economy (Wolf 1). While all these things are good news for the struggling economy, most economic experts believe that a recession of some kind may
be impossible to avoid

Economics Reflection
. Through the process of reading, I learned many things about the economy. First of all, I learned that it is a much more difficult decision to come to
in regards of how much government involvement in the nation's economy is enough, how much is too little, and how much is not enough. I also
learned that trying to keep the economy stable and productive is a constant and difficult struggle, and that it is often difficult to even know what needs
to or can be done in order to stabilize it. While I find economics to be somewhat boring (I am a music major and largely emotionally driven, which
means that my entertainment is usually emotionally involving somehow), I actually enjoyed how Wheelan explained economics in this book. While I
would not read it for fun, reading this book as an assignment was not painful.
Having government involved in the economy has its pros and cons. One of the Pros is that the government can help prevent or discourage harmful
behaviors or actions. Government regulation can prevent man–caused shortages. Fishing regulations are often put in place to prevent overfishing. These
regulations prevent or discourage fishermen from fishing too much in one season, which allows the fish to repopulate and remain available in the
future. In the book, Wheelan mentioned how the government can also tax bad behaviors to encourage behaviors that benefit health and/or the
environment. An example of this is a tax on gasoline and/or larger vehicles, or a tax on cigarettes.

Supply And Demand Essay
Laws of Supply and Demand The market price of a good is determined by both the supply and demand for it. In the world today supply and demand
is perhaps one of the most fundamental principles that exists for economics and the backbone of a market economy. Supply is represented by how
much the market can offer. The quantity supplied refers to the amount of a certain good that producers are willing to supply for a certain demand
price. What determines this interconnection is how much of a good or service is supplied to the market or otherwise known as the supply relationship
or supply schedule which is graphically represented by the supply curve. In demand the schedule is depicted graphically as the demand curve which
represents the...show more content...
This causes the price and the quantity move in opposite directions in a supply curve shift. Also, if the quantity supplied decreases at any given
price the opposite will happen. A sudden increase or decrease in the supply of a particular good is also known as a supply shock. A supply shock
is an event that suddenly changes the price of a product or service. This sudden change affects the equilibrium price. The two types of supply
shocks that exist are the Negative Supply shock and the Positive Supply shock. A negative supply shock, which is a sudden supply decrease, will
raise the prices and shift the aggregate supply curve to the left. A negative supply shock can cause stagflation due to the combination of raising
prices and the falling output. Meanwhile a positive supply shock, an increase in supply, will lower the price of a good and shift the aggregate supply
curve to the right. A positive supply shock could be advancement in technology which most certainly makes production more efficient which thus
increases output. For example a positive supply shock could be shown in the early 1990s when communication and information technology exploded
which resulted directly in productivity increase, and an example of a negative supply shock would be that of the high oil prices associated with Arab
oil embargo of the early 70s is the classic example of this occurrence. Any other factor could also produce this effect. Such as if

American Bankruptcy Case Study
Starting from the problems of failure to pay housing loans (subprime mortgage defaults) in the United States (U.S.), then bubbled damaging crisis
banking system not only in America but expanded to Europe and to Asia. Successive causes a domino effect of the solvency and liquidity of financial
institutions in these countries, which among others led to the bankruptcy of hundreds of banks, securities firms, mutual funds, pension funds and
insurance. The crisis then spread to parts of Asia, especially countries such as Japan, Korea, China, Singapore, Hong Kong, Malaysia, Thailand,
including Indonesia, which happens to have long had precious letters these companies.
Of the various criticisms of the experts, that the problem was triggered...show more content...
Lehman Brothers announced a gradual loss before bankruptcy. On June 16, 2008, the company announced losses worth 2.8 billion U.S. dollars for
the second half of 2008. Followed by a loss of 3.9 billion dollars in the third half of 2008 (September 10) and resulted in bankruptcy announcement on
September 15, 2008. A similar shock is almost the same experienced by Merryl Linch, Citigroup, AIG and various other large financial institutions.
This reflects the weakening of the real sector with the bankruptcy of major U.S. companies like General Motors, Ford, and Chrysler that threaten
thousands of its employees work. Sure enough, the U.S. unemployment rate reaches 6.7% increase in line with the increase in pessimism among
consumers and investors during the period September to November 2008. It is the job separation rate (FLE) in the 34 largest last year. Recorded
533,000 employees laid off and reached a total of 1.91 million in 2008. (source: the U.S. labor department). Along with that, on November 30, 2008,
the U.S. government also announced a reduction in the value of real GDP for the part–III of 2008 by 0.3%.
Similarly also in Europe, the banking crisis in Europe was marked by problems at a small bank in the UK, the Bank Northen Rock, in mid–2007.
Northern Rock is a true small–scale private bank in the UK. However, when there Gonjang–ganjing crisis in August 2007 and the bank became the
spotlight. Withdrawal of major funding by the client

Economic Evaluation Essay
The change in health profiles of the population and the evolution of medical technology have made more explicit the gap between what medicine can
do and what is economically feasible (Fuchs, 2000). Resources to satisfy needs are scarce and every society must decide how better to allocate the
scarce resource among the different alternative uses. Economics tries to address the normative question of which allocation of resources is best for the
society. The answer to such question depends crucially on the objective being pursued. When comparing different alternatives, under the classical
assumptions of competitive markets (the Arrow–Debreu economy) and Pareto efficiency, a reallocation is said to be efficient if no one in the economy
is made...show more content...
This is the so–called Hicks–Kaldor criterion, which allows making judgements about policies without making inter–personal comparisons. However,
there are two problems with this criterion: marginal utility of income must be the same across individuals and it may be the case that a movement
back to the original allocation increase welfare, so it would be impossible to define which allocation is better. Also, the information that would be
needed to collect makes the application of this criterion quite infeasible.
This is the theoretical basis for many cost benefit studies in health care that rely on methods like contingent valuation to measure benefits from health
care interventions. If this is the theoretical basis for cost benefit analysis, it means the acceptance of Pareto optimality concept and its related
distributional implications. Individual utility is what is being maximised and individuals are assumed to be the best judges of their own welfare.
Given the limitations of the welfarist approach, some have argued to rely on explicit welfare functions to aggregate individuals' preferences and
explicitly address the issues of distribution, but as Arrow demonstrated, it is impossible to aggregate individual preferences in a coherent way. Working
on the Sen's ideas, it was showed that interpersonal comparisons were the

Behavioral Economics Essay

More Related Content

Similar to Behavioral Economics Essay

Recently uploaded

Behavioral Economics Essay