Comments on: Does Behavioral Economics Offer Anything New and True?

By: Bob from Business Courses

Bob from Business Courses — Wed, 24 Aug 2011 07:04:17 +0000

For any business, there must be some form of measurement to be able to quantify if a CEO is efficient or not. Saying one has “good” management skills is subjective if not backed by facts and figures.

By: Assorted Links « Daily Expositions

Assorted Links « Daily Expositions — Sat, 11 Sep 2010 16:18:53 +0000

[...] Does behavioral economics offer anything new? [...]

By: Economics and economists « Bubba & Cleetus

Economics and economists « Bubba & Cleetus — Wed, 30 Jun 2010 15:34:20 +0000

[...] by coming up with new fancy terms and ideas to move forward. This is good, but new? For example, here you can read about Austrian economist Peter Klein’s (at Mizzou) irritation with behavioral economics. We [...]

By: Dirk F.

Dirk F. — Tue, 01 Jun 2010 13:07:29 +0000

By: I discovered an example of Stigler’s Law « Permutations

I discovered an example of Stigler’s Law « Permutations — Sun, 30 May 2010 21:38:12 +0000

[...] (1976), Goodhart’s Law (1975), and the Lucas Critique (1976). Just recently I came across a reference to “Steve Kerr’s classic 1975 article, [On the Folly of Rewarding A While Hoping for [...]

By: cosas

cosas — Sun, 30 May 2010 15:28:13 +0000

Good point you made in your post!!!!!, but stock price it is not a panacea either, subprime mortages crisis is the ultimamte result of firm’s management pursuing the holy grail of stock price paradise doing stupid things, not to mention Goldman Sach practice of selling financial products to their clients and at the same time betting against those same products, all these nonsense in the name of stock price….so there must be better ways of working out these management’s incentives and their maesures.

By: Peter Klein

Peter Klein — Tue, 25 May 2010 20:04:03 +0000

We like easy.

By: CB

CB — Tue, 25 May 2010 14:56:39 +0000

So, behavioural economics is critisized, mainly based on a HBR paper. Simultaneously the blog (different blogger though) critisizes HBR as being a not-serious-journal.

So, why offer critique of a theoretical tradition based on a paper in a “poor” journal? It’s making things a bit too easy, isn’t it?

By: srp

srp — Mon, 24 May 2010 20:49:53 +0000

Amen on HBR’s decline. My favorite example is the embarrassing Booz & Co. article on strategy execution in their June 2008 issue. They recently placed this thing in their “must reads” greatest-hits collection, which is pretty funny since the collection is funded by Booz and the current chief marketing officer at Booz is the guy who edited HBR when the article was printed.

The most amazing part about this article is that it uses a research design for which you would flunk an undergraduate–trying to measure a variable that only varies across firms by using within-firm data. They end up running regressions where all the variation on the right-hand side is due to measurement error, by construction. There are other show-stopping biases as well, but the research design is the one with real Dunning-Kruger implications.

By: bee

bee — Sun, 23 May 2010 00:13:48 +0000

Dan is a commercial success and people (including Dan) confuse it with a material intellectual contribution.

Behavioral economics is not about economics, its about psychology. Economics is the study of exchanges, while behavioral economics is often simply the characterization of cognitive biases that arise in certain settings. Its primary limitations are (1) that is weak on both offering a cognitive basis for the phenomena under investigation; and (2) context is atypical. Behavioral economics should return to its old moniker Behavioral Decision Theory.

Economic theory uses the assumptions about actors to understand exchanges. This is true for classical economics, Agency theory, Game theory, Transaction Action Theory, ect. The challenge is to employ simple assumptions about the actors to make exchange level inferences. What never ceases to amaze me is how economic inferences operate with such stylized assumptions like rationality.