Origin and Evolution of Behavioralists, Concepts, and Difference to Neoclassic Economics

The Origin and Evolution of Behavioralists
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The Origin and Evolution of Behavioralists
The establishment of patterns and trends is essential to business management because the aspects determine the stability of a business which is ultimately critical to its sustainability. Making business decisions necessitates the ability to predict. While it is easier to make informed guesses on objective aspects such as the impact of different policies on certain commodities, making predictions on human behaviors is much more complex. Neoclassic economics was seemingly the first significant attempt at exploring the influence of human behavior on business, such as response to incentives and changing prices. The science of behavioral economics has established itself as a more accurate predictor by incorporating the fields of economics, psychology, and biology to analyze consumer behavior. It is fundamental to study the critical contributors of behavioral economics, its key concepts, and its dissimilarity with neoclassic economics.
Daniel Kahneman and Richard Thaler are the key names that resound in the analysis of behavioral economics. True to the definition of behavioral economics, Kahneman was a psychologist, and Thaler, an economist, thus, representing the critical constituent fields (Heidl, 2016). Moreover, acknowledging Amos Tversky as a significant contributor and Kahneman’s copartner is essential. However, he failed to receive the Nobel prize award, which came six years after his death, and the prize was not awarded posthumously. Kahneman and Thaler’s fame is partly due to their stature as Nobel laureates. The history of the behavioralists dates back to Daniel Kahneman and Amos Tversky’s joint” prospect theory project” (Heukelom, 2014). Richard Thaler has subsequently been credited with naturing the project of Kahneman and Tversky into what would become behavioral economics. Thaler won his Nobel prize fifteen years later after his predecessor. The prospect theory is fundamentally based on the perception of gains and losses (Wakker, 2010). Psychology’s input elevates the analyst from the mechanical evaluation of the business returns to the emotions elicited by the possibilities. Thus, not enough for the consumers to intellectually determine the probability of gains and losses. They have to feel the gains and losses. The theory subtly borrows from David Hume’s conclusions that reason is the slave of passions. Thus, emotions are highly determinative in the decision-making process (Ainslie & Butler, 2015). As a result, one can use perceptions to analyze business and to make market predictions. The bold hypothesis in psychology was ultimately expected to overflow to and influence the fields focused on human choices and action.
One of the significant distinctions between neoclassical economics and behavioral economics is the conception of humans. The depiction of humans as...