Johnny Ch Lok

Research business behavior and consumer psychology Johnny Ch Lok

In conclusion, I shall indicate two theories to explain why economy and psychology has close relationship to influence human do any behavioural economic activities daily. For example, through the prospect theory, behavioural economics adds new parameters to improve the mathematical modelling method, which was advanced by economists for decisions taken under uncertainty. However, the theory also proposes a slightly different interpretation. The results are interpreted by the individual as positive or negative deviations from a reference point, which has a neutral psychological value. Last but not least, in addressing social preferences, behavioural economics adds parameters that increase the concern of decision-makers to also assess their utility function in relation to others. For another example, the choice theory; secondly there is not a common consensus between the specialists of behavioural economics regarding the variables that should be included; and finally, many variables that affect the behaviour are not quantitative, but qualitative, and cannot be precisely measured. The findings of behavioural economic are relevant and can help the mainstream theory by providing a more realistically base of study. However, this argument has contributed to the development of behavioural economics, because there are a large number of phenomena that cannot be entirely explained by the mainstream economics. So, why in the beginning, I indicated why behavioural economics does not imply the totally exclusion of the neoclassical approach and the most studies in this area try to provide a more realistic base of the standard theory. In the concluding, I believe that in time, behavioural economic models will replace the simplified ones, based on unlimited rationality. Also, economists have provided a great importance to the quantitative structures, departing from the human nature. However, behavioural economics can become truly revolutionary only it will always be receptive and will provide a critical insight to their own theories and perspectives, and especially the ones regarding the aspects that they reproach to the traditional economic theory. However, I also feel that the individual's behaviour on the market is determined only be economic factors. In brief, individual choices and, by this, the demand variation are explained only and the variations in the prices of products/services and the available personal income. Am important discussion in the field of determine directly the economic behaviour of an individual ( like the sociological and psychological of factors ) are actually active elements in the process the reshaping of the utility functions. Finally, in my view, I believe that the conduct of the market phenomena, as it occurs in reality. In this sense, the research of behavioural economics aims to see how the neoclassical model could be improved, using mainly psychology concepts. Although, there are some specialists who argue that behavioural economics can be an alternative to the neoclassical theory.