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TOK presentation

How far should reason and logic play in the fundamental assumption of economics

Charlene Ho

on 13 September 2012

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Transcript of TOK presentation

How far should reason and logic play in predicting our economic behavior? Should we base our behavior on reason and logic or are there other aspects that influences our behavior even though it goes against our perception of reason and logic? Economics Basic economic Assumption: Each individual seeks to maximise their own utility Origin: Greek word οκονομία "management of a household, administration" from οκος "house" + νόμος "custom" or "law" hence "rules of the house(hold)" Real life situation: My friend saw 2 perfumes that to her smelt the exact same, but she chose to buy the Gucci one instead of the drugstore one knowledge issue: link to other real life situations Prisoners dilema Game theory: Demand and supply curve Example: 1. Can we know our behavior? Can it even be measured
2. How do we as individuals know our behavior and be more aware of ourselves?
3. To what extent should reason and logic play in predicting economic behavior?
strategic placing of sweets/unhealthy foods Example: $1 for a magazine and $5 for a magazine My experience Thus, this shows us that people may react in a way that does not reflect "rational behaviour" as termed by the human sciences Advertisement So what? What does this matter to me/the world different cultural/academic perspectives and considers implications in other areas of knowledge/real life situation Will it be the same outcome in psycology? creating social pressures rebranding the potato- Prussia All value is relative 1812/1813 wealthy Prussians highest status jewelry was made of iron - symbolic value 18 century america aversion of wealth placebos Can human behavior be measured/predicted? Different from natural sciences Yes No Sense Perception-advertising Reason and logic Emotions intuition How do we know what influences our behavior thus be more aware of ourselves (actions)? To what extent should reason and logic then in predicting economic behavior? Ways of knowing through history Considering these ways of knowing, we can perhaps understand our behavior better thus prevent being tricked by advertisements and make more informed choices in the future surveys feel a sense of envy, disgust etc. All humans are unique individuals No constants thus cannot generate laws Cannot study social data in numerical form limits to our senses? Surveys Problems?
- human incentives eg a survey about the kind of magazines you read
- normative
-May not be a neutral survey, may persuade people to react in a certain way with loaded language eg. abortion Observation Problems?
- Hawthorne effect product reviews CCTV cameras Statistics unavoidable interaction between subject and scientist self-fulfilling Social issues cannot be studied like sciences as you cant control variables or repeat experiments Value based- normative/positive We are the thing doing the studying If the human brain is simple enough to understand, we would be too simple to understand it- Emerson pugh Authority - economists
-psycologists focus groups think-do-feel feel-do-think reason-8% of your actions lizard brain eg. eye tracker to measure attentions, pupil dilation to see cognitive and emotive processing and heart beat/skin detector eg. when you hear about bad thing, your heart beat goes down and vice versa neuromarketing 1. Different between the Cognitive brain and emotional brain
2. cognitive brain is not as predictive (are you going to buy it?) as your emotional system
3. emotional damage bad for decision making with perfect recall for what you see etc. you need the emotional feeling to compel you to
4. cross culture because you dont ask questions, you measure bodily response
-dial test
-EEG research
assumption that
we pay attention to relationships
halo effect changing people's behavior But new research (neuromarketing) have suggested that our emotional brain has a bigger impact on our behavior than our cognitive brain (reason) Although reason can be linked to emotion, we cannot be sure it definitely causes it but it is still an important way of knowing correlation does not prove cause Humans are part of nature too thus if natural science assumption We can invent experiments to reduce the problems eg. stroop technique and experiments from developmental psychology to show what a baby understands correlation does not equal causation value based value based Scientific methods eg. education level vs income Nature vs Nurture what affects human behavior Thus we should continue to use reason/logic, but be more open to the importance of other ways of knowing and change it if good experimenting shows that others eg. emotion is more important
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