"We’re beginning to see that it’s not the way we long assumed it was, particularly not the way professional economists assumed it was.” This has implications for how politicians and economists regulate and model future behaviour, but also for how we manage our own consumption. Some of the insights coming from behavioural economics have been known intuitively by marketeers and advertisers for decades.
We like to follow the crowd, we favour familiarity (and so tend to prefer well-known but inferior brands over superior newcomers), we tend to go with default settings rather than making individual changes and we instinctively put all our eggs in one basket (hence the property bubble). However, even the marketeers underestimated just quite how irrational we actually were."
the examples are good...for instance:
“If you offer people a cash discount for paying in cash instead of plastic, a certain proportion of people will pay cash and get the discount,” he says.
“However, if you change it so that it’s exactly the same situation but you call it a ‘credit card surcharge’ suddenly the proportion of people who do it will radically alter. Very few people will be willing to pay the surcharge and they will put in the effort and will pay in cash instead. But it’s basically the same decision."