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Knowing and Making wrote a new blog post titled Book review: Alchemy, by Rory Sutherland
Rory Sutherland's new book Alchemy: The Surprising Power of Ideas that Don't Make Sense continues his 10-year campaign against the traditional, logical pursuit of business advantage, through a scientific lens that includes several cognitive economics themes. As ever, a curated series of amusing anecdotes about people or companies who took an unusual angle on marketing or product invention, fuel a philosophical wander. That philosophy could be summarised as: if it makes sense, someone's...
24 days ago
Knowing and Making wrote a new blog post titled From Behavioral to Cognitive Pricing
Below is an article by Leigh published in INsights magazine. The magazine published by the Neuromarketing Science & Business Association. See the article in its full glory here or just the text below. Behavioral pricing has been used for many years but is essentially based on changing customers' behavior without creating new value. Cognitive pricing is a new paradigm in which the customer's positive mental experience can be given a monetary value. The ability of companies to earn premium...
29 days ago
Knowing and Making wrote a new blog post titled What is cognitive economics?
What's happening inside your head right now? What thoughts, feelings, ideas are spinning around in there? Are they important to you? If you were not able to think those thoughts, would you care? How much does your internal mental experience matter to you? To an economist: not at all. Traditional economics explicitly rules out any consideration of how people think, and what is going on in their minds or hearts. Economists only trust what they can observe: specifically, the things you buy and...
113 days ago
Knowing and Making wrote a new blog post titled Why endings matter [spoiler-free Game of Thrones references]
It probably has not escaped your notice that the Game of Thrones TV series finished this week. If you use social media at all, I suspect you also saw some anguished squawks about how awful the ending was. How the incompetent writers screwed it all up. Maybe you even signed the petition, along with 1.5 million others, to have the last series remade with a different conclusion. Personally I thought it wasn't a bad outcome, but I seem to be in the minority. Either way, why does this have such...
118 days ago
Knowing and Making wrote a new blog post titled Reporting back: the Cognitive Economics session at the AEA conference
[Tara posting today] We had a great response to our Cognitive Economics session at the American Economic Association’s conference a few weeks ago. For those who weren’t there, here’s a quick summary of the four papers presented, and the discussion at the end. Dan Benjamin, Kristen Cooper, Ori Heffetz, and Miles Kimball presented What Do People Want? The key question of this paper is: how can we measure happiness? And how do we account for the biases and differences across different groups...
144 days ago
Knowing and Making wrote a new blog post titled What makes a useful theory?
If conventional economic theory is so wrong (as we are repeatedly told) why does it survive so well? This post by UnlearningEcon prompted me to think again about why economics, despite widely accepted empirical data from behavioural econ, is broadly taught in the same way as before, and why its basic assumptions still underpin much modern research. Some have a sociological explanation for this. In this view, economists are invested in the old approaches, have spent decades honing...
144 days ago
Knowing and Making wrote a new blog post titled Three systems: a mechanism for mental and social narrative
Alex Rosenberg says here that we are instinctively driven by stories, narrative and theory of mind - a very useful instinct on the small scale - although that instinct can be misleading on the larger scale of history and politics. His book on this claim is also out, though I haven't read it yet. It seems uncontroversial that the idea of narrative has a powerful hold on how we think. There are thousands of discussions of storytelling as a way for us to bond with other people, and the biases...
211 days ago
Knowing and Making wrote a new blog post titled What people want, cognitive goods, models of persuasion and why we avoid important information: the cognitive economics session at the AEA conference
For the first time, there will be a session on Cognitive Economics at the American Economic Association’s conference. The conference, in association with the ASSA, is taking place from Friday 4 January to Sunday 6 January and will be a hugely interesting programme over the long weekend. The Cognitive Economics session will take place on Sunday 6 January 2019 at 8-10am in Atlanta Marriott Marquis, International 10. I hope that any readers who are attending the conference are able to come...
211 days ago
Knowing and Making wrote a new blog post titled “Mysterious psycho-logic”, the “Nudge Unit” and irrational humans: tune in to Leigh Caldwell and Rory Sutherland on BBC Radio 4's show Thought Cages
“Mysterious psycho-logic”, the “Nudge Unit” and irrational humans - Leigh explores cognitive and behavioural economics and science with Rory Sutherland on BBC Radio 4’s show Thought Cages today and on Friday. Tune in at 13:45 today to hear Leigh discussing behavioural and cognitive economics on Thought Cage’s next episode: Instinct Before Logic: The Postbox at the O2. During this episode, Rory and Leigh will be exploring why reason is no longer used to persuade us to change our behaviour,...
297 days ago
Knowing and Making wrote a new blog post titled A new team member and new plans
Hello, today it’s not Leigh posting, but me, Tara, his new colleague! I’ve recently started working for Inon and with Leigh on his cognitive economics work. I’ll be writing content on cognitive economics, spreading the word about cognitive economics to both academic and general audiences and also organising events around cognitive economics. I wanted to take this opportunity to introduce myself and also fill you in on some exciting events on cognitive economics coming up. All cards on the table...
315 days ago
Knowing and Making wrote a new blog post titled Rebuilding macroeconomics
Spending today and tomorrow attending the Rebuilding Macroeconomics conference at the Treasury. The programme looks very interesting - highlights include: Ekaterina Svetlova's opening talk on "Imagining the Future", which I think will be quite relevant to System 3 and an idea I have been working on, prospective expectations: the concept that actors based their decisions not on a Nash equilibrium (rational expectations) or on a simple extrapolation of the past (adaptive expectations), but on...
354 days ago
Knowing and Making wrote a new blog post titled Neuroscience, psychology and economics: the evidence for System 3 (long)
In my last post I outlined the concept of System 3, what it is and why it matters. In short, System 3 is the mental ability to imagine the future and evaluate how happy you will be in it – based on how pleasurable the process of imagining itself is. A lot of different research strands have come together to result in the identification of System 3 as a distinct mental process. I summarise the key steps here: The fundamental building block of System 3 is the stimulus-response relationship. It...
511 days ago
Knowing and Making wrote a new blog post titled Introducing System 3: How we use our imagination to make choices
In recent years we’ve become used to thinking about decisions as “system 1” or “system 2”. System 1 choices are automatic decisions, made without thinking, based on an immediate emotional or sensory reaction. System 2 is used to stop and rationally calculate the consequences of our choices, and determine the best cost-benefit tradeoff. But these two processes don’t capture every decision. Indeed they might only encompass a minority of our daily choices. Recent work in neuroscience and...
511 days ago
Knowing and Making wrote a new blog post titled Book review: The Choice Factory by Richard Shotton
There are few truly universal books on behavioural science: like most of the others, this one has a particular reader in mind. Richard's reader works in advertising, and it must be a rare advertising executive who still hasn't heard of behavioural economics. Richard therefore heads straight into the meat of the book with little beating around the rational-agent bush. A couple of connected anecdotes start us off and we quickly get to the first of 25 chapters, each on a single bias, that make up...
559 days ago
Knowing and Making wrote a new blog post titled A program for cognitive economics
I’m visiting the American Economics Association conference in Philadelphia this weekend and looking forward to catching up with the latest in theoretical and empirical research. Behavioural economics has received another endorsement this year with Richard Thaler’s receipt of the Nobel Prize. The behavioural field still has only a small minority of the conference’s papers, but many more than a few years ago. It finally feels like an accepted part of the broader field. Echoes of a new discipline...
624 days ago
Knowing and Making wrote a new blog post titled The amoeba and the squirrel
[An essay written for the Internet Review, a one-off maybe-to-become-annual publication documenting (and celebrating?) Internet trends] Every human has two minds: one like an amoeba and one like a squirrel. The amoeba mind is reactive, emotional, intuitive. It decides immediately, without planning or consideration. It is Freud’s “id”, or the System One of behavioral economics: the amoeba is your unconscious. Your squirrel mind plans, trades off immediate pleasures for future gain, is capable...
854 days ago
Knowing and Making wrote a new blog post titled The gender pay gap on Euristica: an imaginary island
I recently gave a talk at TEDxCoventGardenWomen about an economic agent-based modelling system I have built (readers of Thomas Schelling may see some influence). In the talk I use this system to analyse ideas around privilege, prejudice and systemic inequality - and to test some policies that might help to solve the persistent gender and racial pay gaps that we still see in most societies. The video is below - your thoughts would be very welcome.
935 days ago
Knowing and Making wrote a new blog post titled Discussion 3 of 3: Lassie died one night
The much-delayed final episode in a short series of posts - part 1 and part 2 here. Lassie died one night. As Thomas Schelling* pointed out in a thought-provoking 1982 essay, millions of people watched it happen on television one Sunday evening, and cried. Yet they all knew Lassie was not real – and that the dog who played her was probably in perfect health. Why did they experience the same emotions, the same sense of loss that they would expect to feel if their own dog had died, or even...
953 days ago
Knowing and Making wrote a new blog post titled How does it feel to be part of Europe?
I had this piece drafted before the murder of Jo Cox last week. But I don’t think it changes anything I was going to say. It simply makes it more urgent to say it. May I introduce you to my two lovely young nieces? Natasha is four months old and Rosalind four years. They live in rural Devon, and they’re just starting to discover the world and decide how to feel about it. I want to think a little about what it might feel like to be in their world. The campaign for Britain to remain in the EU has...
1185 days ago
Knowing and Making wrote a new blog post titled Discussion 2 of 3: No spooky action at a distance - a theory of reward
One of the most powerful ideas in physics is the principle of locality. This principle insists that objects can only be influenced by other objects that touch them. Two items separated by a distance cannot directly exert any force or influence on each other, but must communicate via some medium which physically transmits the force from one to the other. Albert Einstein described this principle as "no spooky action at a distance" and it applies to his theory of gravity as well as all the other...
1271 days ago