Throughout the past decade, behavioral economics has made an enormous impact in the realm of academia, government and public policy. Today, this framework is now entering the world of marketing and consumer research — and its influence will be profound.
As conveyed through the work of Nobel Prize-winning economist Daniel Kahneman, Profs. George Lowenstein (of Carnegie Mellon), Dan Ariely (Duke University) and others, behavioral economics turns conventional thinking on its side. Specifically, it questions the central premise of traditional economics, which is that people are inherently rational decision makers who maximize their self-interest by carefully weighing the pros and cons of their options. In place of this rational “Mr. Spock” model, it puts forth a “Homer Simpson” model of human behavior, which states that our decisions are largely driven by a wide number of factors (such as impulses, habits, social norms, etc.) that operate beneath our consciousness.