Behavioural Economics Pt4 Flashcards
How can behavioural economic policies be useful? and whats its focus?
it can help overcome MF.
its focus is on choice architecture.
What are choice architecture policies
(nudge policy)?
policies that can get consumers to do something to improve social welfare.
through nudges, we still have choice
What are some choice architecture policies?
Framing
Nudges
Default Choices
Restricted Choice
Mandated Choice
What is framing policy?
when the gov can force companies to display certain info in a certain way.
EG: show calories
What is nudge policy?
gov can change placement and location to influence decision
What is default choice policy?
being opted into something, unless we opt out.
EG: organ donation
What is restricted choice policy?
restricting the number of choices available to consumers in order to smplify decision making.
EG: a limited selection of healthy foods in the cafeteria.
What is mandated choice policy?
when consumers are required to make decisions.
EG: Organ donation, you either accept or reject, so a choice must be made.
what are the problems with nudge policies?
Very unpredictable and costly
Too paternalistic
Strong enough policies
what are the evaluation points for nudge policies?
Costs v Benefits
Info provision may be better
Other policies may be better
Very unpredictable and costly (Problem)
No guarantee that it will work and can be costly to enforce. If costs outweigh benefit, there may be gov failiure
strong enough policies (Problem)
Are the policies strong enough to overcome deep-rooted issues like addiction.
Enough to change behaviour.
Too Paternalistic (Problem)
Is the gov going a bit to far to influence our decision making?
cost v benefits (evaluation)
cost may outweigh benefit. =gov failiure
Info provision may be better (evaluation)
may be better to give all info needed to influence better choices
