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Essay / Research Paper Abstract
This 9 page paper looks at an article by Kolbert (2008), “What Was I Thinking” , summarizes the article discusses the contents in terms of microeconomics. The article concerns the why a customer may increase the amount they spend with the company just to get free shipping, with a net increase the cost to themselves. The concept of behavioral economics, marginal utility, and maximization of utility are all discussed. The bibliography cites 5 sources.
Page Count:
9 pages (~225 words per page)
File: TS14_TEmicroutil.doc
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Unformatted sample text from the term paper:
more with an online store they may get free deliver may increase and stimulate a potentially disadvantageous decision. In order to get free delivery, with a total of $3.99, the
author was compared to spend another $12, increasing the spend to themselves. Kolbert goes on to consider this from an economics perspective and how increasing a spend may be seen
as self punishing, with neoclassical economics finding it difficult to explain. The problem is the way consumers are viewed, in the neoclassical approach to economics with consumers acting
as rational calculators, making logical decisions in a way that could help to maximize and benefits. However, it appears that consumers do not always make the logical or rational decisions.
These miscalculations are explained by Dan Ariely, in his book "Predictably Irrational: the Hidden Forces That Shape Our Decisions" be put forward
a number of studies which demonstrate the way in which circumstances and impact on decisions, utilizing the concept of behavioral economics, he argues that there are predictable influences on the
way that decisions are made, even when a decision made appear to be irrational. One such circumstance is a desire to take advantage of free shipping, even when one has
to spend more to obtain it. The concept of behavioral economics is not new, it came to the fore about 25 years ago, following on from work from theorists
such as Tversky and Kahneman, that looked at the way in which human decisions would be made under conditions of uncertainty and utilization of heuristics, including the way that biases
may be creating decision-making, such as inferences made from personal experience. The experiments undertaken have been repeatedly numerous times since, with the
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