Decision making systems
Decision making systems
Following the lead of Nobel Prize winner, Daniel Kahneman, behavioural theorists often use the two systems model to explain how decisions are routinely made.
System 1 is automatic and uses short-cuts to make quick decisions, often based on common sense estimates and emotional reactions to choice.
System 2 is a more deliberate decision making process, using conscious thinking an reflection. System 2 is much slower than System 1, and hence, in situations where a quick decision is required, System 1 is often the dominant system. While System 1 is often more convenient, it is subject to biases and errors which can lead to irrational decision making. System 2 is, however, more easily manipulated – perhaps towards decision making that is harmful to individual consumers, and to third parties.
Go to: Bounded rationality and self control
Stagflation is a combination of high inflation, high unemployment, and stagnant economic growth. Because inflation isn't supposed to occur in a weak economy, stagflation is an unnatural situation. Slow growth prevents inflation in a normal ...
The laissez-faire economic theory centers on the restriction of government intervention in the economy. According to laissez-faire economics, the economy is at its strongest when the government protects individuals' rights but otherwise doesn't intervene. The ...
What Is Adverse Selection? Adverse selection is a term that describes the presence of unequal information between buyers and sellers, distorting the market and creating conditions that can lead to an economic collapse. It develops ...
Explaining The K-Shaped Economic Recovery from Covid-19 A K-shaped recovery exists post-recession where various segments of the economy recover at their own rates or levels, as opposed to a uniform recovery where each industry takes the same ...
Does Public Choice Theory Affect Economic Output? Both on paper and in real life, there is a solid relationship between economics, public choice, and politics. The economy is one of the major political arenas after all. ...
Largest Retail Bankruptcies Caused By 2020 Pandemic As we know at this point, the COVID-19 pandemic has thrown major companies in the US and the world over into complete havoc. Many have filed for bankruptcy, with an ...