An Application of Basic Economics Concepts to Behavioural Economics

Using the articles by Quah, Soh and Tan (2017) ‘Why Thaler matters: A rational look at behavioral economics’ https://www.straitstimes.com/opinion/why-thaler-matters-a-rational-look-at-behavioural-economics and Khanna (2017) ‘Nudging companies to do the right thing’ https://www.straitstimes.com/opinion/nudging-companies-to-do-the-right-thing from The Straits Times as a starting point show how the economics concepts can be applied to a contemporary economics issue. The following economics concepts may be considered in your analyses: • Axioms – you can question whether economic agents are always rational and consistent, is more always better than less or can you have too much of something, are consumers the perfectly rational utility-maximizing decision-makers, and bring in alternative concepts in behavioral economics. • Preferences / Indifference curves – you can discuss the intertemporal stability of preferences and bring in concepts of time inconsistency – self-control etc. • Marginal rate of substitution – you can question how economic agents value goods and services, and how the endowment effect can affect how individuals place value on things. • Budget constraint – you can extend the discussion to intertemporal choice, time value of money, etc. • Choice / Consumer equilibrium – you can discuss how framing, anchoring, bracketing can affect choice.