The new global economy and financial evolution

The themes and methods of the new global economy and financial evolution. In the mid-20th century calendar year, research and analysis of the relationship between psychological behavior and economics are stimulated by technological development.

Herbert Simon's contributions present alternatives generated by the incorporation of cognitive intuition into classical economic models. Nobel Prize in Economics in 1978 for his work on behavioral economics Behavioral economics emerged worldwide in the 1980s.

The new global economy and financial evolution

The new global economy and financial evolution

According to behavioral economics, it is impossible for humans to think only in utilitarian categories, for logic to be independent of emotion, for all possible risks to be taken into account, and for all economic decisions to be consistent.

In fact, people's behavior is influenced by the behavior and emotions of others in society. This can lead to behavior that, at first glance, may seem irrational. But is it possible to predict the consequences of such decisions and, indeed, to guide the decisions people make based on their intuitions and feelings?

Tax Reminders

The tax reminders sent to Guatemalan citizens are an example of how individuals' economic decisions can be guided by reasoning from the field of behavioral economics.

In behavioral economics, this sociological effect is called the anchoring effect. Another definition is "status quo," which describes people's tendency to favor the default option.

Take another example. No one disputes the importance of organ donation in saving lives. However, even those who have positive thoughts about organ donation often do not accept it and volunteer to become donors.

Funding New Countries

This is why in many countries all citizens are considered organ donors unless they wish to do so themselves. In fact, doing nothing is the default option.

In countries with this rule for organ donation, if a citizen does nothing, they are automatically replaced as an organ donor. This is an example of the status quo concept, which dictates behavior in the interests of the individual and society.

The concept of loss aversion also examines people's attitudes toward notions of profit and loss. Studies have shown that people respond more to losses than to gains.

Win a lot of money.

Think about it. Would you experience joy if you suddenly came across a large sum of money in an unexpected place? Or would you be sadder if you lost that same amount of money walking down the street? Although the circumstances may seem the same, the human psyche tends to react more strongly to loss.

In other words, the concepts and models discussed in behavioral economics have broad equivalents in everyday life. The causes and consequences of people's irrational behavior are best understood by examining the sociological and psychological elements of the picture.

Investment Information

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Conclusion.

The comments and recommendations contained in this document are general in nature. These recommendations may not match your financial situation or your risk and return preferences. Accordingly, making an investment decision based solely on the information contained in this document may not meet your expectations.

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