Essays
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Understanding Rational Choice Theory
As I wrote in an earlier post, there are multiple forms of rationality. When psychologists find deviations from rationality, they usually refer to violations of rational choice axioms – i.e., procedural rationality. There are multiple ways to think about procedural rationality, but the most common axioms are derived from utility theory. In the literature, these axioms…
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Why Chess Tells us that Rationality is Impossible
There are three definitions to rationality. Let’s briefly explore them.
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Three Rules from Prospect Theory on Experience Design
As I discussed in an earlier article that you should read for context, prospect theory has a wide range of implications on behavioral economics. One area in which prospect theory is particularly important is in the domain of mental accounting, which concerns how the way in which we think about and categorize financial activities can…
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Goal Acceleration (Gradient)
As we get closer to achieving a goal, we invest more in trying to achieve it. Making users feel like they’re far along will encourage them to act. Bank of America This is the first page during the mobile check deposit process. The app makes you feel like you’ve already on the 2nd step… before…
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The Critical Implications of Prospect Theory
Prospect theory, outlined in 1979 by Kahneman & Tversky in what became one of the most cited papers in the social sciences [pdf], is the bedrock of modern behavioral economics. It’s often portrayed in the popular press as the instantiation of a phenomenon we can all intuit: the displeasure from losing $5 is worse than…