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What is Behavioural Economics?

What is Behavioural Economics?

What is behavioural economics?

 

Transcript

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Behavioural economics is a relatively new field in academia, and it’s quite different from traditional economics, because it takes the view that we aren’t all objective rational beings in a very simplified form. So basically it takes into account our emotions, our psychology, our irrationality, if you like, and looks at the way people really behave by studying what people really do. And you find that there are many patterns across all cultures.

 

For example, people tend to be risk averse, people tend to like the status quo. At the same time people like to feel they have a choice, even though they don’t like to change a lot or may be risk averse. People will pay a premium for certainty. People also like the power of free. If you can offer something for free, it will change-, the texture of what you’re talking about at the negotiation table changes once you throw in something for free.

 

And these are all patterns that from a purely rational objective perspective might not make sense, but they are very predictable. And in fact there’s a book that’s a very famous book now Dan Ariely called ‘Predictably Irrational’. Well actually we’re all irrational, so let’s just get over it and accept it. The good thing though also for mediators and other people working with people in conflict is that a lot of this irrationality is predictable. So you can work with it and you can ask about it and you can get people to articulate it.

About the mediator

Nadja Alexander is an award winning author and educator (2011, 2007, 1997) and a conflict intervention professional. She holds professorial appointments Australia and the United States and has taught mediation at universities and in corporate settings all over the world. Nadja is an independent adviser on mediation policy to national governments and international bodies, such as the World Bank Group. She has been engaged in the field of confl... View Mediator