Example on Personal Experiences Related to Behavior Economics

Every day of our lives, behavior economics applies. It explains some of the behaviors that we do not put into much consideration. For example, as a student, we are expected to take examinations. Whenever a student fails, one tries to find ways not to restore one self-esteem. A student tends to give explanations of why he/she failed. Most of us tend to say that we did not revise for our examination hence the failure.

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Many are the times' human beings make decisions without certainty. I am no exception. As I pursue my degree am not sure if I will get a lucrative job or end up tarmacking. It is all about chance and luck. Expected utility theory estimates the likely outcome of an action (Briggs, 2019). I recently decided not to benefit me or throw me into a hole full of lions.

Some months back, I decided to place part of my school fees on a betting site. Peer pressure and the thrill of having three times more of the money fueled my decision. My friends had assured me that it was a 'sure win.' After debating with myself for hours, I decided it was worth the shot. After ninety minutes of sweating and praying, I was unsure whether to hang myself or wait for my parents to do it. That was the longest night I have ever heard in my whole life. I lost the game, school fees, and the semester. Funny enough, I did not think about the repercussions if I lost.

I knew there was a chance it would end in premium tears, but I did not delve into it as much I should have. It was all about how I would celebrate after winning. The universe had its plan. To date, I have never recovered from the punishment I was slapped with after breaking the news to my parents. Every single time I remember what I did, I wish I had done something different with the money.

Prospect theory is all about losses and gains. Losing something specific hurts more than the feeling of happiness that we feel when we gain the same thing (Sandburg, 2019). Losing almost three-quarters of my school fees was a whole different level of hurt, shock, disappointment, and regret. I had the chance to choose between option A- 50% success and a 50% chance of losing the money. Option B 100% chance of loss and I went for the first option. A quick calculation showed how much more money I would add to my savings if I won. Had I won the money, I would have been thrilled, but that happiness would not have amounted to the kind of hurt I experienced after the loss. According to Daniel Kahneman's theory, individuals prefer specific outcomes over probable ones. In most cases, individuals ignore similar information when making a decision (Chen, 2020).

Most of the time, I get impatient and go for a short time immediate reward instead of waiting for more enormous rewards that come later. According to Mani (2017), this is called hyperbolic discounting. Most of the time, when I have assignments to be done, I check the submission date. If it is a week from now, I will sit and wait for a few days before the deadline. At this point, there is a deadline to meet and consequences that will follow for late submission, yet I will still put it off and procrastinate. At such times I opt for my enjoyment instead of the reward I get for accomplishing my assignment in time. I tend to console myself by saying, 'I will do it later in the evening; let me turn on Netflix a bit. Let me sleep a bit and wake up refreshed.' There is always an excuse for me not to do the assignment before rush hour. Sometime back, I was given a choice between earning $50 in a day and 60$ in a week. I choose the first option. I was then asked to choose between making 50$ in a year or 60$ in a year. I prefer the second option. A lot of important decisions concerning our well-being are affected by hyperbolic discounting.

Anticipatory utility theory shows the feelings of anticipation experienced before the resolution of uncertainty. Ever found yourself in a situation you know nothing about? Well, that is me. Trouble keeps finding me. I know for this particular issue, I was innocent. Still, the deep, ugly scars on my body and legs say otherwise. When I joined campus, I had little or no knowledge about the consequences of riots. Today I can write a whole book about it and top it with a continuation.

At one time, a memo was sent across, asking not to attend classes as there was a strike. The thrill of sleeping in was unexplainable. There were no more waking up early until further notice. I got out of the house to buy foodstuffs. I was close to campus, so I heard noises. Screams. You know the saying that goes, 'Curiosity killed the cat.' I can attest that it's true. I followed the noises only to find hundreds of students running. It was no typical marathon. People were running for their lives.

Conclusion

I stood there like a statue looking as the drama unfolded. I did not know how and when the police got to me. I did not even know there were policemen around. All I felt was pain coursing through my veins, then darkness. I found myself in a hospital gown and bed, with an injured head, broken arm, and leg. I was training for a rugby game that would be watched by thousands of people, but I already had broken limbs and severe migraines. I was not sure if I was going to get well before the beginning of the game. Miraculously, I was declared fit to play a few weeks to the game. This accident evoked a multitude of emotions related to anticipation theory. I anticipated going back to the field, but I was also afraid of the disappointments. What if I could not run well? What if I let my team, parents, friends, and family down?

References

Briggs, R. A. (2019, August 15). Normative Theories of Rational Choice: Expected Utility. Stanford Encyclopedia of Philosophy. https://plato.stanford.edu/entries/rationality-normative-utility/.

Chen, J. (2020, August 28). Prospect Theory. Investopedia. https://www.investopedia.com/terms/p/prospecttheory.asp.

Mani, L. (2017, August 23). Hyperbolic discounting: Why you make terrible life choices. Medium. https://medium.com/behavior-design/hyperbolic-discounting-aefb7acec46e.

Sandburg, K. (2019, February 20). Prospect Theory. Medium. https://medium.com/strategy-dynamics/prospect-theory-37eaa1e250bb.