Thursday, April 1, 2010

Cost vs expected utility? Ha! We do what feels good.

From Costco by Jonah Lehrer:

As I note in How We Decide, this data directly contradicts the rational models of microeconomics. Consumers aren't always driven by careful considerations of price and expected utility. We don't look at the electric grill or box of chocolates and perform an explicit cost-benefit analysis. Instead, we outsource much of this calculation to our emotional brain, and rely on relative amounts of pleasure versus pain to tell us what to purchase.

Is it true that UT has no undergraduate classes in behavioral economics? If so, that's a shame.

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