070: Chronis Lalas on Prospect Theory and ‘Making a Behavioral Economist’

Chronis Lalas is an aspiring Behavioral Economist who is researching and publishing about the applications of Behavioral Economics in the real world. Chronis is a recent graduate of the University of Macedonia, Greece with a BA in Economics.

Chronis blogs at The Newbie Economist and aspires to be a behavioral economist that will optimize Fortune 500 corporations’ marketing campaigns through analyzing their existing customers’ behavior.

He aims to bring a fresh perspective to traditional economics by optimizing in consumer behavior analysis and brand management. As a young economist, his vision is to inspire students and the young generation to take on Behavioral Economics. His work has been published, amongst others, in the Online Political and Economic Newspaper The European Sting.

Economists:

In this interview, Chronis mentions: George Lowenstein, Dilip Soman, Leigh Caldwell, Yoram Bauman, Steve Keen and Dan Ariely.

Economics:

In this interview, Chronis mentions: behavioral economics, prospect theory, confirmation bias, loss aversion, financial crisis, capital controls, austerity, nudge and utility theory.

Who Chronis Would Love to Collaborate with:

Dan Ariely, Rory Sutherland of Ogilvy and Nir Eyal.

In this episode you will learn:

• what is Prospect Theory.

• about the infamous Prospect Theory graph.

• about loss aversion and how Prospect Theory differs to Bernoulli’s Utility Theory.

• how Prospect Theory is observed in Greece post the financial crisis.

• about the reciprocity shown by TOMS shoes in Thessaloniki.

• what makes consumers buy.

• how consumer behavior can be influenced by manipulating their subconscious through a creatively built environment.

• How playing French music influences the purchase of French wine.

• How the names of products and how they are pronounced can change the way consumers think about the product.

• why and how companies should consider a brand name for their product or service so as to maintain long-term customer loyalty.

• about the plans that Chronis is undertaking including his behavioral economics comic.

Prospect Theory Paper and Graph:

• Kahneman, D. and Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk. Econometrica, 47(2), pp. 263-291.

Books:

• Thinking, Fast and Slow by Kahneman and Tversky
• Predictably Irrational by Dan Ariely
• Nudge by Thaler and Sunstein
• Misbehaving by Richard Thaler
• Hooked: How to Build Habit-Forming Products by Nir Eyal
• Why We Buy: The Science of Shopping by Paco Underhill
• Decoded: The Science Behind Why We Buy by Phil Barden

Blog:

• www.nirandfar.com by Nir Eyal
• www.behavioraleconomics.com by Alain Samson
• www.thebehaviouraleconomicslab.co.uk

Links:

• Episode 067 of the Economic Rockstar podcast with Leigh Caldwell 
• Behavioral Economics in Action by Dilip Soman 
• The Behavioral Economics Guide 2015

Research:

• North, A. C. The Effect of Background Music on the Taste of Wine.
• North, A. C., Hargreaves, D. C. and McKendrick, J. (1997). In-store music affects product choice. Nature
• Maglio, S. J., Rabaglia, C. D., Feder, M. A., Krehm, M. and Trope, Y. (2014). Vowel Sounds in Words Affect Mental Construal and Shift Preferences for Targets. Journal of Experimental Psychology: General.

Where to Find Chronis:

• Website: The Newbie Economist
• Email: chronis@lalas.info

Credits:

• Parisian Kevin MacLeod (incompetech.com)
  Licensed under Creative Commons: By Attribution 3.0 License
  http://creativecommons.org/licenses/by/3.0/

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