irrationality - Economics Students Society of Australia

irrationality

A collection of 3 posts

The sunk costs fallacy: an unlikely friend

behavioural economics

The sunk costs fallacy: an unlikely friend

Sunk costs are one of the first things any economics student learns about. For the uninitiated, a sunk cost is defined as ‘a cost that is already incurred and cannot be recovered’. Specifically, it is taught that any rational decision maker should not take sunk costs into account when making

E-con? Economics and Irrationality

behavioural economics

E-con? Economics and Irrationality

I was working, alone and bored, on a pretty quiet Thursday last week. As anyone familiar with behavioural economics would know, there isn’t much of an incentive for me to work harder than adequate if I’m being paid hourly. My boss knows this, and he knows he’s

Behavioural economics: a primer

Behavioral economics

Behavioural economics: a primer

It has frequently been observed that people often reach different conclusions from the same set of information, based on how it is presented; this is referred to as the “framing effect.” Tversky and Kahneman (1981) showed how framing can affect the choice made between two life-saving programs. One group of