Here you can read our FREE Guide on ECO 201 8-2 Discussions: Frontiers of Microeconomics and see its solution.
Instructions of ECO 201 8-2 Discussions
Economic behavior is more complex than assumed by conventional economic theory. Political economy explains the functioning of government. Behavioral economics ties psychology into human behavior.
Economists assume that individuals make rational decisions. However real people are more complex.
Based on what you have learned in your assigned reading, answer the following questions in your initial post:
What are the human behaviors economists should observe when creating economic models? For example: people tend to find solutions that are good enough, but not the best solutions.
In your responses, comment on at least two of your peers’ posts and share an example of how non-rational human behavior can change an economic outcome.
To complete this assignment, review the Module Eight Discussion Rubric.
Step-By-Step Guide on ECO 201 8-2 Discussions: Frontiers of Microeconomics
Introduction to ECO 201 8-2 Discussion
This Owlisdom How-To Guide aims to assist you in tackling questions related to the complexities of economic behavior and the fundamentals of behavioral economics. The guide outlines steps to approach these topics effectively, enhancing understanding and applying the concepts discussed in readings on behavioral economics, rationality, and irrational choices to solve ECO 201 8-2 Discussions: Frontiers of Microeconomics.
What are the human behaviors economists should observe when creating economic models? For example, people tend to find solutions that are good enough but not the best solutions.
Exploring Behavioral Economics
We will explore behavioral economics to start the ECO 201 8-2 Discussions: Frontiers of Microeconomics.
- Define Behavioral Economics: Explain behavioral economics as the study of psychological influences on the economic decisions of individuals and institutions.
- Importance of Study: Stress why understanding behavioral economics is crucial for developing accurate economic models.
Example
Studying behavioral economics should come first; then, we can develop economic models, whether visual, mathematical, or simulation-based.
Behavioral economics research examines how psychological concepts are applied to people’s and organizations’ economic decision-making processes. (Samson, 2022). In an ideal world, people would choose the decision that would result in the most significant number of advantages and happiness levels; unfortunately, this is not the case in the real world. Rationality is the aspect of conduct that should be examined with the utmost priority. Rationality is essential for making reasonable and logical judgments; nonetheless, people often make decisions based on impulses and feelings rather than rational considerations. It has also been proved via the sound choice theory that when people are confronted with alternatives in times of scarcity, they generally pick the one that favors their own needs and desires as individuals.
Another tendency to keep an eye out for is the reasons why individuals make illogical choices. Irrational choices result in behavior that does not reflect the predictions given by economic models when such decisions are implemented. The field of behavioral economics investigates the reasons why individuals make the choices they do. For instance, why do people choose a big coffee over a small one, or how much money are they willing to spend on an ice cream cone?
Another habit of checking is whether someone is making choices in their best interest. Behavioral economists demonstrate that cognitive bias, social factors, and emotional states influence individuals’ preferences. When people act rashly and emotionally when they make judgments, economic models are sometimes rendered less effective or impossible to finish.
In your responses, comment on at least two of your peers’ posts and share an example of how non-rational human behavior can change an economic outcome.
Peer Responses
Responding to peers is one of the vital parts of the ECO 201 8-2 Discussions: Frontiers of Microeconomics posts. We need to provide at least two peer responses. I will provide one example post. You can write your peer responses by keeping the below points in mind.
- Encouragement of Engagement: Guide students on effectively engaging with peers’ posts, suggesting they share examples of non-rational behaviors affecting economic outcomes.
- Examples to Consider: Offer ideas such as panic buying or herd behavior in financial markets as discussion points.
Response 01
Hey Sam! You’ve made some compelling points about the importance of behavioral economics in understanding non-rational decision-making. It’s fascinating how emotions and biases can lead to economic outcomes different from what traditional models predict. For instance, during the stock market crash in 2008, panic and fear drove many investors to sell their stocks at low prices, significantly worsening the market’s downturn. This behavior starkly contrasts with the rational decision-making expected in economic models, highlighting how psychological factors can profoundly impact economic stability (Mankiw et al., 2021).
Response 02
I have addressed the given instructions in one response. Following these instructions, you can quickly write your peer responses to ECO 201 8-2 Discussions: Frontiers of Microeconomics without a hassle.
Closing
By following this ECO 201 8-2 Discussions: Frontiers of Microeconomics guide, students will be better prepared to discuss and analyze the nuances of economic behavior in a structured and insightful manner, enriching their understanding and application of financial theories in real-world scenarios.
References
Samson, A. (2022). An Introduction to Behavioral Economics. BehavioralEconomics.Com | The BE Hub. https://www.behavioraleconomics.com/resources/introduction-behavioral-economics
Mandler, T., Sezen, B., Chen, J., & Özsomer, A. (2021). Performance consequences of marketing standardization/adaptation: A systematic literature review and future research agenda. Journal of Business Research, 125, 416–435. https://doi.org/10.1016/j.jbusres.2020.12.023
