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Economic Rockstar

Connecting Brilliant Minds in Economics and Finance

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

January 28, 2016 by Frank

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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 chronis lalasBehavioral 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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Economic Rockstar Guests on TED

January 14, 2016 by Frank

Economic Rockstar TED

If you found the Economic Rockstar podcast interesting, then you’ll be interested in the TED talks that some of my guests gave on TED. Here they are ready for you to watch for your convenience. Enjoy!

Dan Ariely: Our buggy moral code

If you haven’t listened to Dan Ariely’s interview on the Economic Rockstar podcast, then check it out here.

Alex Tabarrok: How ideas trump crises

If you haven’t listened to Alex Tabarrok’s interview on the Economic Rockstar podcast, then check it out here.

Loretta Napoleoni: The intricate economics of terrorism

If you haven’t listened to Loretta Napoleoni’s interview on the Economic Rockstar podcast, then check it out here.

Dan Ariely: How equal do we want the world to be? You’d be surprised.

Dan Ariely: Beware of conflicts of interest

Dan Ariely: Are we in control of our own decisions? 

Dan Ariely: What makes us feel good about our work? 

065: Best of 2015 Part 1: A Look Back at the Economic Rockstar Podcast

December 31, 2015 by Frank

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2015 Part 1

I’m Frank Conway and I am the host of the Economic Rockstar podcast. I do my best to bring on the brightest and most meaningful guests onto the show. Thank you so much listening and thank you for subscribing to the show on iTunes.

For those of you who have subscribed to the Economic Rockstar community at economicrockstar.com, I thank you for your feedback, interaction and shared insights and views. Let’s build this community bigger, both in size and knowledge.

I’m so grateful to have been in a position to bring to you a wide variety personalities to the show. While reflecting on the year 2015 for the podcast, I was amazed by the diversity and caliber of my guests and the incredible conversations we’ve had.

Their research, books, opinions, outlook, personal stories and teaching pedagogies is, to say the least, quite inspiring and has personally opened my eyes to the boundless capabilities in economics and finance. I truly hope that you found it to be likewise.

Both the end of year ‘Best of 2015’ episodes gives us a snapshot of some topics that were discussed – like a time capsule for the Economic Rockstar podcast of 2015. If you’ve been with me all year, then this episode will act as a refresher and take you back to some of the debates that abound the fields of economics.

If you’re new to the show or relatively new, then perhaps these episodes will offer you a window to glimpse into the show and type of guests and topics that we cover. Hopefully, they will encourage you to explore and listen to previous episodes of the podcast. For a full listing, you can visit economicrockstar.com/podcasts.

Although I did my utmost to choose a best of compilation that captured the essence of this podcast, it was extremely difficult to leave out some of my amazing guests.

I loved all my guests and every single one of them gave up their time to speak to me about their career, their research and personal lives. They exposed themselves to you, my amazing listeners, and answered questions that they had not seen before.

It was almost impossible to choose who to leave in and that’s why I reached to my Community on my email list for their favorites. Thanks for a great response. If I left out one of your favorites, then I apologize as I know how you feel. I’ve provided all the links to the show notes at the economic rockstar website at economicrockstar.com/65.

This is my mix-tape, my compilation of Economic Rockstars, so press play and do what you love doing while you listen – crosswords, chess, darts, exercise, walking the dog or cleaning the house.

What’s compelling about the guests on my show is how much of the work that they do is for the betterment of society as a whole.

The teaching innovations adopted and applied by John Cochrane, Kim Holder, Shawn Humphrey, Marina Adshade, Abdullah Al-Bahrani, Matt Rousu, Alice Lousie Kassens and Craig Medico have created an active rather than a passive economics classroom, helping their students to better understand concepts and how to apply them in a meaningful way.

Others guests, such as Jason Shogren, Alvin Roth, Dan Ariely, Helena Norberg-Hodge, David Simon, David Zetland, Stephen Young, Shanta Deverajan, Shawn Humphrey and Christine Exley have used their knowledge as a platform to help those in need – be it humans, animals or our environment.

The Economic Rockstar podcast also invites guests with a career in finance and it was such a pleasure to have spoken to Jack Schwager and Campbell Harvey.

Guests who feature in the Best of 2015 Part 1:

050 Dan Ariely -Professor of Psychology & Behavioral Economics at Duke University in North Carolina. 

057 Alvin Roth – Craig and Susan McCaw Professor of Economics at Stanford University.

043 Herbert Gintis – Emeritus Professor of Economics at University of Massachusetts.

036 Jason Shogren – the Stroock Professor of Natural Resource Conservation and Management and Chair of the Department of Economics and Finance at the University of Wyoming.

034 David Simon – lawyer and advocate for sustainable consumption. 

023 Loretta Napoleoni – expert on terrorist financing and the Islamic State.

048 Steve Hanke – Professor of Applied Economics, specializing in currency boards. He is Co-Director of the Institute for Applied Economics, Global Health, and the Study of Business Enterprise at The Johns Hopkins University in Baltimore.

051 Eyal Winter – the Silverzweig Professor of Economics at the Hebrew University and Economics Professor at Leicester University.

054 Christine Exley – Professor of Business Administration at Harvard Business School. Christine is also Co-founder and Chief of Research at Wagaroo an organization dedicated to re-house homeless dogs to responsible and loving families.

046 Shanta Devarajan – Chief Economist of the World Bank’s Middle-East and North Africa Region.

059 Shawn Humphrey – Associate Professor of Economics at the University of Mary Washington. Shawn is the founder of La Ceiba Microfinance,the Two Dollar Challenge, the Month of Microfinance, and the Poverty Action Conference. 

016 Jack Schwager – industry expert in futures and hedge funds and the author of a number of widely acclaimed financial books. Jack is one of the founders of Fund Seeder.

037 Noah Smith – Assistant Professor of Finance at Stony Brook University, New York where he is also a member of the Center for Behavioral Finance research team.

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050: Dan Ariely on Irrational Behavior and the Importance of Our Environment When Making Decisions

September 16, 2015 by Frank

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050: Dan Ariely on Irrational Behavior and the Importance of Our Environment When Making Decisions

Dan Ariely is Professor of Psychology & Behavioral Economics at Duke University in North Carolina. Dan’s interests spanDan Ariely a wide range of behaviors, and his sometimes unusual experiments are consistently interesting, amusing and informative, demonstrating profound ideas that fly in the face of common wisdom.

In addition to appointments at the Fuqua School of Business, the Center for Cognitive Neuroscience, the Department of Economics, and the School of Medicine at Duke University, Dan is also a founding member of the Center for Advanced Hindsight.

Dan is the author of the New York Times bestsellers Predictably Irrational, The Upside of Irrationality, and The Honest Truth About Dishonesty and his latest book Irrationally Yours is now available.

Dan has received numerous honors and awards in medicine, psychology and economics.

Dan received a B.A in Psychology from Tel Aviv University, an M.A and PhD in Cognitive Psychology from University of North Carolina and another PhD in Business Administration from Duke University.

Influencer:

Professor Hanan Frenk, Tel Aviv University

Economists:

In this interview, Dan mentions: Brian Wansink. 

Psychologists:

In this interview, Dan mentions: Mike Norton and Elizabeth Dunn.

Economics:

In this interview, Dan mentions and discusses: Tragedy of the Commons, behavioral economics, public goods, pricing, decision-making, choice architecture, Ulysses Contract, happiness, asymmetric dominance effect and choice.

Takeaway:

“Think about your environment and always experiment” – Dan Ariely

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In this episode, you will learn:

  • about Dan Ariely’s traumatic experience resulting in severe burns.
  • how Dan Ariely found his love for psychology and behavioral economics.
  • why Dan will not be teaching his Irrational Behavior course on Coursera.
  • the problems with MOOCs like Coursera and why it is making the wrong choice regarding its open platform system.
  • why Dan was turned down for his first book – a cookbook and what advice he was given by a publisher.
  • why we as humans make very costly mistakes and what we can do about it.
  • how people eat more than they realise and how experiments in economics have shown this.
  • why we are bad at doing things that makes us happy.
  • the most common mistake companies make when making decisions or processing information.
  • how companies can avoid making mistakes.
  • if anger is a good or bad emotion.
  • the most surprising finding from Dan Ariely’s research.
  • the most surprising question put to Ask Ariely.
  • how to get poor people in Kenya to save.
  • how your environment matters when making decisions.

Quotes by Dan Ariely in Episode 50 of the Economic Rockstar Podcast:

“Choice architecture is this idea that our environment influences how we make decisions” – Dan Ariely

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“In the process of trying to not make any mistakes, companies create environments that punish risk and therefore punish ingenuity and growth” – Dan Ariely

“Tim is a very interesting character and he is experimenting on himself. We have to realize that his experiments have the validity that they work very well for him” – Dan Ariely

On Coursera:

“I think we do need rules for trolls. I think that pricing is a very good mechanism for some things and I’m not sure it’s a mechanism for all for all things like this. The reality is that Coursera probably over samples from the people on the tail of the distribution in terms of mental stability.” – Dan Ariely

Books:

  • Predictably Irrational by Dan Ariely
  • The Upside of Irrationality by Dan Ariely
  • The Honest Truth About Dishonesty by Dan Ariely
  • Irrationally Yours by Dan Ariely
  • The 4 Hour Chef by Tim Ferriss
  • Happy Money: The Science of Smarter Spending by Elizabeth Dunn and Michael Norton

Resources Mentioned by Dan Ariely:

  • Kitchen Safe: www.thekitchensafe.com
  • Coursera: www.coursera.org

Where to Find Dan Ariely:

  • Website: www.danariely.com
  • Twitter: @danariely
  • LinkedIn: Dan Ariely
  • Ted: www.ted.com

Transcript:

The full transcript of this episode with Dan Ariely will be available shortly.

Thanks for Listening!

Thanks so much for joining me again this week. Have some feedback you’d like to share? Leave a note in the comment section below!

If you enjoyed this episode, please share it using the social media buttons you see at the bottom of the post.

Also, please leave an honest review for the Economic Rockstar Podcast on iTunes! Ratings and reviews are extremely helpful and greatly appreciated! They do matter in the rankings of the show, and I read each and every one of them.

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Frank Conway

Frank Conway is founder of Economic Rockstar and lecturer of economics, finance and statistics. Read More…

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