Johnny Ch Lok

How consumer behavior causes change Johnny Ch Lok

, I shall analyze whether the relationship between the discipline of behavioral economy and psychology which two branches are totally opposite or if the behavioral theories is only complement that mainstream economics. I think study of economy is the behavior of the complex human beings; this science examines how people choose to act and allocate resources in different market situations. So the economic analysis, is based on the implications that arise from a series of simple assumptions ( which are sometimes cited as unrealistic) regarding the human nature. However, in psychological view, the individual is characterized by unlimited rationality and by the ability to follow time consistent, in every situation, his self-interest. In these conditions, behavioral economic attempts to consider a field of analysis in the study of economic phenomena. Because economics deals with the study of human behaviour on the market, it highlights the human character of the science and the fact that, besides of all the patterns and models, the analysis refers to the real individual. It is also behavioural because it attempts to combine approaches from several sciences mainly from economics and psychology, and also from sociology, philosophy, anthropology or biology. This is not an easy mission, in the conditions in which these various disciplines have adopted in time different approaches that became, in many ways, contradictory. So, behavioural economics is that a multidisciplinary approach will increase the explanatory power of economics. On one hand, there are specialists two argue that behavioural economic is a field of economics that continues the hand, there are others who see it as a distinctive school of thought, which proposes a new paradigm. However, behavioural economists propose a multidisciplinary study, criticize certain assumptions on which the traditional model is built ( such as rationality and self-interest, in their unlimited form), resource to experiments ( the classical method of psychology) to validate some assumptions, propose new theories ( such as the prospect theory) and advance different interpretations of the economic behaviour, e.g. how to maximize consumers satisfy their needs. This issue is concerned to concern consumption of psychology and social economic situation research aspect. Also, I think that behavioural economics can help the economic science by describing more realistically the utility functions of the individuals. This field of study is based rather it is a natural extension of the basic approach. However, it is can be claimed that behavioural economics is also built on the premise that psychology methods and assumptions are equally important. Also, models of behavioural economics, allow the utility to depend on the differences between one's own level and a reference level. People are sensitive to changes and preferences are not stable in time. The vision of behavioural economics concerning the inter-temporal choice ( which assumes that individuals prefer immediate gains and delay unpleasant activities) seems to be more appropriate to the human behaviour that the one of the traditional model ( which assumes that utility is updated over time).