The discipline that combines the branches of economics, psychology and neuroscience is known as neuroeconomics. Examples The most common examples of this can be found in marketing plans based on people's behaviour or in the decision-making process, to cite some of the best-known cases.
In this post we are going to talk about neuroeconomics and look at examples for its practical application in the business environment.
The way information is presented can completely change the final outcome. Neuroeconomics and its examples demonstrate this to us from a 2006 study carried out by De Martino, Kumaran, Seymour, and Dolan. The experiment presented a situation similar to the following.
Imagine we give you €100. Now you have to make a decision:
Ante esta situación, un 57% de los sujetos de estudio optó por quedarse con 40 € y devolver los otros 60 €.
However, what was truly surprising was the following. To another group of people with the same profile, the same situation was presented in a different way:
In other words, the second option remained exactly the same, while the first was expressed differently, even though the outcome was the same. In this case, it was 48.4% the number of people who opted for the first option. And it was all due to the way the terms of gain and loss were presented. In other words: when faced with the prospect of a gain, there is a greater fear of risk and loss.
Many companies and many salespeople are familiar with this, using behavioural psychology to their advantage. In reality, it's not about manipulation, but about how you present information, something everyone does in the most favourable way for their company.
Proposed by Kahneman and Tversky in 1979 as an alternative to expected utility theory, prospect theory shows us another case of neuroeconomics and examples of how to use it in business.
Prospect theory states that if a person earns, for example, €1,200 a month and receives a wage increase A person earning €1,500 a month will experience pleasant and positive emotions. Conversely, if someone earns €1,800 a month and, due to a cut, their salary drops to €1,500 a month, the emotions generated will be painful and negative. Even though both earn the same amount, one is happy and the other is displeased and will likely end up leaving the company.
From this, we find different forms of application in the business environment:
To conclude this post on neuroeconomics, examples, and uses, we highlight the importance of emotions and mood at the time of making economic decisions:
It's important to achieve a balance between both extremes. Emotional intelligence is vital in this regard. Knowing how to curb impulsive decision-making and learning not to procrastinate on urgent decisions relies on allowing a period of reflection.
As always, emotions are the key.
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