Behavioural Economists and Promote an Orientation to Group

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Question 1.
One of the assumptions that many behavioral economists subscribe to is the idea of 'stable preferences.'’ Notably, one of the dominant beliefs is that given a broader period and a larger perspective, humans have dynamically consistent preferences that can be observed as a pattern in itself. Accordingly, there are several theories and underlying assumptions in economics that give this theory a leg to stand on. In this article, the author would discuss some of these theories.
One of the reasons why there is a tendency for individuals to experience similar preferences over time is because of an individual's social nature and the power of affect or emotions. In one article written by Loewenstein et al. (2001), the authors noted that compared to the "cognitive-consequentialist" belief that people consistently assess their options and decide based on their careful estimation of the risks and benefits, these so-called 'rational decisions' are most likely affected by the presence of risks, thereby causing individuals to act on these rational decisions. Additionally, some studies also suggest that even 'anticipatory' and 'anticipated' reactions to these risks could indirectly affect individuals' day-to-day decisions. One of the best exemplifications of the 'risk-as-feeling' hypothesis could be seen in the stock market. Following the cognitive-consequential model, stock traders are should more likely when the share prices are down since it provides the best consequence, that is, discounted share prices. However, stories would show that most traders lose because of their "anticipatory emotions" of regret or anxiety if a falling stock price continuously decreases in price. Accordingly, when these kinds of news (i.e., news about falling share prices) are disseminated into social or digital media, most people tend to sell, thereby creating a stable preference over time.
Another article that supports the importance of 'effect' as discussed above is the principle of "intertemporal choices," as discussed by Loewenstein and Thaler (1989). According to this principle, individuals know the importance of making 'intemporal choices' or what most would call "good timing." Whether it be buying stocks, starting a family, or buying new furniture, economists believe that timing is one of the elements that individuals consider before proceeding with their decision. However, one reason people fail to make these "rational decisions" is that most options are vague. Not all details that must be available to a purchaser are made publicly and widely available, limiting their capability to choose the most optimal choice. Now, how does this relate to the idea of stable preference over time? The answer again lies in the 'effect of emotions' and 'dissemination.' Similar to what was said above, digital media and social media help stir emotions in consumers who do not know about all the relevant facts of their decisions. Thus, since they do not have much knowledge, the emotions of the market affect their preferences, which then creates a stable preference over time when viewed from the perspective of the overall society.
Additionally, another article written by O'Donog...