From the neuroscience experiments: An add-in to the theory of Consumer Behaviour

Recent research has shown that when making decisions with immediate consequences, economic actors typically display a high degree of impatience. Consumers choose immediate pleasures instead of waiting a few days for much larger rewards. Consumers want "instant gratification."
However, people do not behave impatiently when they make decisions for the future. Few people plan to break their diets next week. Instead, people tend to splurge today and vow to exercise/diet/save tomorrow. From today's viewpoint, people prefer to act impatiently right now but to act patiently later.
Economists need to study its consequence on the savings behaviour and implications for optimal saving institutions.

Richa Shukla

(Globsyn Business School)

Are you loss averse? It may be an innate rather than learned attribute

New research out of Yale University argues that monkeys and humans exhibit similar economic biases, and that economic decision-making have much deeper roots than many economists suspect.

The study involved presenting the capuchin monkeys with "two payoff-identical gambles: one in which a good outcome was framed as a bonus, and the other in which bad outcomes were emphasized as losses. Like humans, the monkeys displayed a strong preference for the first option, and like humans, the monkeys seemed to weigh the losses more heavily than comparable gains."
"Given the capuchins' inexperience with trade and gambles, these results suggest that loss-aversion behaviour extends beyond humans, and may be innate rather than learned."

With this interesting finding there exists definitely a challenge to see "whether systematic economic biases such as risk-aversion are learned behaviors – and thus easily ameliorated through market incentives – or biologically based, arising in novel situations."

(Source: http://news.mongabay.com/)

Richa Shukla

(Globsyn Business School)