Behavioral Economics Essay

This essay will compare and contrast two theories of behaviour management by Carl Rogers and BF Skinner and argue ways in which one of these theories could be implemented for a particular context and practice. Roger’s theory is based on a humanistic approach, while Skinner’s theory takes a behaviourist approach; each theory has both benefits and shortcomings. Their views form opposite ends of the learning spectrum. These theories will be examined as their respective works address the underlying issue of how children learn to behave.

Applied behavioral analysis (ABA) is the leading scientific method that helps patients with Autism to overcome their condition. In order to improve their condition, ABA specialists focus on a system of reward, which encourages positive actions like speech, social activity and life skill improvements. This works mostly with children as they are more likely to absorb and accept new challenges; this is commonly referred to as "positive reinforcement" in the literature and has become one of the leading directions for treatment. ABA therapy was devised and implemented by Dr. O. Ivar Lovaas at UCLA in 1987. Since then, ABA therapy has become a leading branch of psychology - behaviorism.

Kahneman’s article is an analysis of intuitive thinking and how it guides our decision-making. Although primarily aimed at the field of psychology, it is an interdisciplinary article with applications in economic theorising. Kahneman attempts to differentiate between two systems of thought, one of intuition (system 1) and one of reasoning (system 2), and argues that many judgements and choices are made intuitively, rather than with reason (a slower and more deliberate process). Intuitive decision making, which encompasses heuristics, although generally more efficient and rapid, makes the agent potentially subject to errors due to framing effects or violations of dominance. The analysis of the studies and theoretical situations also provides criticism of the commonly held model of the rational agent within economics. The article also further conceptualises Kahneman’s theory, the Prospect Theory (Kahneman & Tversky, 1979), which has descriptive applications of people’s choice in decision-making situations involving risk and known probability of outcomes. These situations are typically unexplained by the more normative rational agent model.

Understanding behavioral economics will also help in making critical decisions like how much a person need to be saving, how much effort we need to put in our works and where we will choose to live in future.

Behavioural economics is the study of the effects that psychology has on the decision making of the economy. This tends to be the way that people think and feel when they are spending money on a certain good or service. The great economist Adam Smith was the first follower of this idea through his book “The theory of moral sentiments” which dates back to 1759. However, it took over 100 years to get a more clarified meaning of how big of a role the psychology of a buyer plays in economics. In behavioural economics there are seven basic principles which all contribute to the decision making process. Behavioural economics can explain how people will react to different situations such as times when there are no economic problems and times when

Cognitive behavioral therapy (CBT) is a short-term, problem-centered therapy that is used to address psychopathology within the individual (Beck, 1995). This model of therapy is used to address issues of depression, anxiety, eating disorders, relational problems, and drug abuse, and can be utilized when working with individuals, as well as within group and family modalities. The core aspects of this therapy include collaboration and participation by the client, a strong alliance between therapist and client, and an initial focus on current problems and functioning (Beck, 1995). The theory of CBT emphasizes the relationship between the individual’s thoughts feelings and behaviors, which is seen as being the underlying cause of

Every single day is a struggle for an autistic child and his or her family. Autism affects all aspects of a child’s life from their ability to show affection to their family to being able to do simple tasks such as communicating and thinking in ways that we take for granted. Autism is defined as a developmental disability in which children experience abnormalities in social functioning, language, often act in puzzling ways, and usually appears before the age of three (Mash &Wolfe, 2010). Although the exact causes of autism are unknown there does seem to be a strong genetic component. Having a child or family member with autism is a constant battle of emotion and frustration. Everyone wants to help the people they love when they have

Economists have often modelled human decision makers as completely rational. According to this model, rational people know their own preferences, gather and accurately process all relevant information, and then make rational choices that advance their own interests. However, Herbert Simon won a Nobel Prize in economics by pointing out that people are rational, but only boundedly so in that they seldom gather all available information, they often do not accurately process the information

I also agree that management has to be able to change and grow and continue to listen to any upward communication from the staff. In order to accomplish better communication, management should provide an ‘open-door’ policy and also informal meetings where employees can either feel free to go to their supervisors first with any questions or concerns and also raise issues with resources or basically anything that interferes with their job performance (Newstrom, 2014, p. 70).

Behavioural Psychology originated in the late 19th to early 20th century and was concerned with the prediction and control of the observable, measurable, external aspects of human experience. Behaviourist psychologists rejected the introspective method used by previous philosophers and psychologists and instead relied on using observation and data that was objective and empirical. This is known as an anti-mentalist approach; Behaviourists considered the workings of the mind

He argued that every human being has unique preferences which greatly influence them when making choices (Breen and Rottman 1995). People are mostly motivated by money and are likely to carry out a cost-benefit analysis before settling on a decision. It is based on the following premises: human behavior is based on rational calculations, human beings act with rationality when making choices and these choices are aimed at maximizing gains or pleasure. In a similar manner, Interactionist Theory (IT) is used to study social interactions among people. It does not study the entire population at once, but rather studies smaller social groups. It focuses on how individuals act and how they make behavioral choices depending on the way they interpret situations (Hindess, 1998, p.42). From another perspective, it states that human beings only react to social stimuli. As such, they are social actors, and must adjust their behaviors in consideration to the behaviors of other human

The Behavioral Learning Theory believes that behavior is learned from either the environment, the people in the individual's life, the media, or society as a whole. This theory contradicts the Biological theory, which states that criminals are "born to be bad" and that criminal behavior is inherited. The behavioral theory looks at the environment as well as society's impact on how an individual acts which might be the reason for criminal behavior. This theory blames the environment as well as the individual by saying it is a learned behavior and that it also was a choice they made. A basic assumption is that behavior is learned and modeled by individuals, groups, the media, and society as a whole.

The efficient market, as one of the pillars of neoclassical finance, asserts that financial markets are efficient on information. The efficient market hypothesis suggests that there is no trading system based on currently available information that could be expected to generate excess risk-adjusted returns consistently as this information is already reflected in current prices. However, EMH has been the most controversial subject of research in the fields of financial economics during the last 40 years. “Behavioural finance, however, is now seriously challenging this premise by arguing that people are clearly not rational” (Ross, (2002)). Behavioral finance uses facts from psychology and other human sciences in order to

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My independent research in the field started with my curious interest in the processes of how decisions made by individuals and governments, what are the main factors encouraged them to choose particular decision over other options and the outcomes of those decisions. Then, I started to read theories of great Economists, such as, Keynes, Freidman , Devenport, Kinnerly and Mason who wrote on decision-making and the ability of individual to interpret the information. Additionally, there were theories by De Bondt , Clark , Tversky and Kehnman who argued that human psychology is interconnected with economics which cannot be ignored. Learning those theories and comparing them with the real life happenings, my enthusiasm to get deeper insights of economics increased. Encouraged by this, I have compiled