Nichole Justine T. Galarion
Prof. Oliver
ECO 2023H
4 March 2018
BEHAVIORAL AND NEOCLASSICAL ECO
An in-depth deep understanding in a consumer’s behavior plays a vital role in business,
particularly in retail industry, but not only in this industry. Advertising agencies are trying to find ways
on how to make such a massive appeal to the public in order to promote and sell their products
effectively. This is why economists are hungry to seek answers on how one individual’s brain works on
how they spend their money. One of the fastest ways to transfer money into one’s pocket is to gamble.
Although there is a low probability of winning any type of gambling games, why do people still do it?
Making decisions is primarily an essential step on winning the game. This includes estimating the
outcome for a chance to win a prize. For instance, in a casino game called roulette, a person would have
to choose a color whether black or red, and an odd or even number (high/low numbers). Then, a person
would have to make a bet; how much a person should offer. Obviously, if he wins it, the more money he
gains. On the contrary, when he lose, it will make a huge damage in his bank balance. So, economists
have invented the word “rational person.” This evaluates the ups and downs of financial transaction,
and will make a precise decision based on the outcome. Unfortunately, this imaginary person does not
exist. The real question is, how does a person reacts and makes a decision based on his financial
condition? In general, people do not often make rational decisions, but it can be rationality along with
emotions.