Behavioral Economic Strategic Business Case Studies

Nowadays, a quarter of the wealth in the USA has more interesting opportunities to do behavioral economies in consumption research. They find that motivated sellers should regard the price who paid as a sunk cost and choose at a nominal loss from the purchase price. Sellers' listing prices and subsequent selling behavior reflects to nominal losses. There are some cases in which no effect would be expected, such as when products are purchased for resale rather than for utilization. For...
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Nowadays, a quarter of the wealth in the USA has more interesting opportunities to do behavioral economies in consumption research. They find that motivated sellers should regard the price who paid as a sunk cost and choose at a nominal loss from the purchase price. Sellers' listing prices and subsequent selling behavior reflects to nominal losses. There are some cases in which no effect would be expected, such as when products are purchased for resale rather than for utilization. For example, do art or antique dealers like with pieces who buy to resell? What about surrogate mothers who agree to bear a child for a price paid in advance? However, evidence on the degree of commercial attachment is mixed. Reference points can also serve as social focal points for judging performance. For an interesting example from corporate finance. In general, when managers whose firms face possible losses ( or declines from a previous year's earnings) are very reluctant to report small losses. As a result, the distribution of actual losses and gains show a very large at zero, and hardly any small reported losses ( compared to the number of small gains). A manager who does not have the skill to shift accounting profits to erase a potential loss ( i.e. has some earnings in his pocket.) is considered a poor manager. It seems that the bad performance manager whose behavior is bad to mislead public to believe his firm have better performance in this year. Hence, in the mental accounting view, people set up mental accounts for outcomes which are psychologically separate, much as financial accountants lump expenses and revenues into separated accounts to guide managerial attention. Otherwise, mental accounting stands in opposition to the standard view in economics that it predicts, accurately , that people will spend money coming from different sources in different ways. So, a generalization of the notion of mental accounting is the concept of "choice bracket" , which refers to the fashion in which people make decisions narrowly, in either a piece meal fashion, or board, i.e. taking account of interdependencies between decisions. For example, when making many separate choices between products, consumers tend to choose more diversity when the choices are bracketed broadly than when they are bracketed narrowly.