So after talking with Mr. Bott in a Google Meet on Tuesday, we decided that using these weekly April journals to also conduct “thought experiments” would be a great use of time, instead of always trying to find something read like I’ve done in the past.
Of course, the immediate application of behavioral economics in these uncertain times is the COVID-19 pandemic. For the rest of this journal, I’ll be talking about some brief “manifestations” of behavioral economics I’ve observed as humans across the world make decisions.
First thing I’ve noticed which might be a stretch, but people violating quarantine could be some example of Gambler’s conceit. People keep participating in the risky behavior of meeting with friends while claiming they could “stop” at any time. But once you have COVID-19, it’s too late to go back on it (just like once you fall into massive debt when gambling). And as a result, the rest of society has to suffer.
Another thing I’ve noticed is that there seem to be two types of people (at least from what I’ve seen online, which in itself is a bias but I digress); those who claim the media is severely overhyping COVID-19, and those were are extremely scared and panic buying essential items (the toilet paper shortage).
People feel very scared because of the availability cascade and the media. Every major news outlet is covering COVID-19, so these vivid descriptions are extremely easy to retrieve by your System 1, allowing you to overweight its probability of infecting you. Hence, people begin to panic buy they like they are preparing for an apocalypse.
Yet at the same time, I believe those who believe COVID-19 isn’t very serious is because they are coming in with a preconceived notion: a confirmation bias affecting System 1. They underweight the probability of COVID-19 because they have yet to have had it infect them or their immediate contacts. And so because there’s no immediate connection/vivid description to sway their System 1s into overweighting it, the confirmation bias takes over.
These are just some of my immediate thoughts regarding the connection of COVID-19 to behavioral economics. When I come up with more, I will be sure to talk about it more in next week’s journal!