A Case Analysis of Decision-Making Process:
Economics and Psychology Perspectives
By
Cui, Chen
Abstract
This is a case-analyzing paper totally based on an actual experience—a bus seats dilemma. The case was fairly worth considering and the author analyzed the case with two different methods: the Economics-Game Theory method and the Social Psychological method. Then the two methods were combined together concerning about the case’s impact toward the future. At the end of the paper, the author concluded that sometimes the informal social conventions could lead to “The Low-level Equilibrium Traps (LET)”. The paper mainly focuses on the internal causes of the decision-making behavior processes.
Key Words:
The Low-level Equilibrium Traps (LET), Conformity, Diffusion of Responsibility,
the Sand Castle Hypothesis (SCH)
JEL Classification: D83, D71, D74
I. Introduction
Human behavior was never thought purely rational, even not quasi-rational from long time ago. The decision making process would be affected by passion, emotion and bias. Economists such as Becker (1976) argued the neo-classical Economics has perfect assumptions, which can combine all the human behaviors into one unique framework. He contributed much but still, the assumptions of the mainstream Economics still are considered to be too strong. As messy as complicating our familiar model of humans will be, however, it is not legitimate for economists to continue to ignore psychological research. Many psychological findings are robust enough, tractable enough, and of enough potential economic importance that we ought to integrate them into Economics. (Robin, 1996)
Formal and informal institutions are introduced in to give suggestions of behaving. In Social Psychology, we often call this Social Roles or Social Norm. People in different cultures will be assumed to accept them even when they were still little children. This is almost like training.
In some certain cases we can survey the procedures more clearly rather than just thinking about it abstractly. Cases at least have two advantages compared to experiments:
(1) The participants unconsciously exhibit their behavior more naturally without any “acting” stimulant.
(2) Relatively lower financial cost.
But cases also have drawbacks that they are more difficult to observe because they could happen anytime and anywhere without enough preparation and they may only take place once. So the data and process could be hard to record and manage.
This paper is due to analyze such a consider-worthy case and look into human behavior especially for the decision making process.
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