Economics Dictionary of ArgumentsHome
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| Decision-making process: A series of steps that people take to make decisions, such as identifying the decision, gathering information, and evaluating alternatives._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Richard Thaler on Decision-making Processes - Dictionary of Arguments
Otteson I 34 Decision-making/Thaler/Otteson: A criticism of the Local Knowledge Argument comes (…) from the work of some recent behavioral economists. >Decisions/Adam Smith, >Knowledge/Adam Smith. ThalerVsSmith/SunsteinVsSmith, Adam: Richard Thaler and Cass Sunstein, for example, in their 2009 book Nudge(1) claim that recent empirical Study of human decision making has revealed that we often make mistakes, even mistakes that we ourselves judge to be mistakes after the fact. This is hardly a new discovery, but their claim is that psychologists and economists have uncovered systematic patterns of mistakes that human beings are likely to make. These include, for example, our susceptibility to present pleasures that come at the expense of other, more remote, or longer-term but greater goals we have. >Nudging, >Behavioral economics. Otteson: Thaler and Sunstein argue that perhaps a role for government is to help structure the choices we make so that we are more likely to make choices that are the right ones, all things considered, even if that means marginally restricting our liberty to choose. They might concede that in Smith's day, when we did not actually know much about human biology, psychology, health, or nutrition, perhaps an argument for free markets and for allowing people to make decisions in a trial-and-error fashion might have been justifiable. Today, however, when we have learned a great deal about human biology, psychology, and so on, there seems little reason to allow people to experiment and try things out. Indeed, it seems almost cruel to let them do so, when we know that people will make mistakes. Otteson I 35 Adam SmithVsThaler/Adam SmithVsSunstein/Otteson: How would Smith respond? He would no doubt acknowledge the great strides made by the modern advances in the sciences of humanity, and concede that we know much more today than anyone did in the eighteenth century. But he would probably also argue that much of what we know, or at least believe we know (remember that experts routinely change their minds and reverse or change their recommendations), is general and abstract, not tied to individuals. For example, we might know that obesity is not only growing in incidence in the United States today but that it poses significant health risks and health costs. But does that mean that I should not eat the doughnut offered to me? Does it mean I should work out more than, or differently from, how I do now? Does it mean I should Skip lunch today and continue working on this book? Questions like these cannot be answered by experts from afar, because those experts do not possess the relevant information about my particular circumstances - and yet those are the decisions facing me, and every other individual. So although we might know in general that obesity is bad, that unfortunately gives little guidance for any particular person or for any particular decision a person must make. 1. Thaler, Richard H., and Cass R. Sunstein (2009). Nudge: Improving Decisions about Health, Wealth, and Happiness. Penguin._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
EconThaler I Richard Thaler Misbehaving: The Making of Behavioral Economics New York 2016 Otteson I James R. Otteson The Essential Adam Smith Vancouver: Fraser Institute. 2018 |
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