Salience: Any thought that is, in a given situation, more readily available to the brain than it would otherwise be is said to be salient. For example, if you ask someone to say “silk” five times and then ask them what a cow drinks, they may say “milk” because the sound “-ilk” is salient. In the context of behavioral economics, certain benefits or costs may be especially apparent, or salient, to the decision maker. These tend to be those that are current or immediately in the future. Things that are more salient tend often to be given much greater weight, resulting in present bias. Salience can be enhanced by priming.
Satisficing: The traditional economic theory of choice is that consumers always seek to maximize their utility, which would require considering all alternatives available. Satisficing in contrast, involves examining options in order of their salience, and choosing the first option that is good enough. Once a good-enough option has been identified then further, typically less salient, options are not explored.
Status quo bias: People’s tendency to favor what they already have. Such a tendency could be consistent with traditional economic theory: there is less uncertainty because a person knows more about the things already possessed, and there may be costs in terms of time or effort in making a change. The bias, then, refers to people being overly wedded to what they already have or chose in the past, such that they miss opportunities that would make them better off.
(https://en.wikipedia.org/wiki/List_of_cognitive_biases).
4 This type of thinking is known as cognitive dissonance.
5 With regard to the latter, behavioral economists have also studied decision fatigue, the idea being that having to make decision after decision can be so mentally enervating that the quality of the decisions made falls over time (Danziger et al., 2011).
6 Also of importance is the issue of “better decisions” from whose perspective. Normally behavioral economists are thinking of the person—
that is, to help maximize utility. But behavioral economics tools are also sometimes used to encourage behavior that, some feel, would be in society’s best interest. Increasing people’s tendency to recycle is an example. To the extent that individual and social welfare are at conflict, behavioral economics interventions can be both controversial and raise ethical issues, as discussed at the end of the chapter.
7 Gigerenzer (2015) objects to the conflation of libertarian paternalism and nudging. While he does not object to the notion of nudges, he argues against the libertarian paternalistic view that people need to be nudged because they are irrational. Rather, Gigerenzer argues, it “focuses the blame for societal problems exclusively on the individual mind, closing our eyes to institutions that steer individual behavior so that they can take advantage of it, and it misleadingly suggests that a more sustainable solution, educating people, is a hopeless endeavor” (p. 363).
8 It should be noted that the families of the girls who completed the program also received a goat “to help offset the costs of delaying marriage” which in turn also could have been partly responsible for the results.
9 Prospect Theory is sometimes cited as a theoretical basis for behavioral economics. By one account, Kahneman and Tversky’s (1979) original article on the concept is the fifth most referenced article in the history of social sciences, with over 41,000 citations on Google Scholar as of June 2016. See http://blogs.lse.ac.uk/impactofsocialsciences/2016/05/12/what- are-the-most-cited-publications-in-the-social-sciences-according-to-
google-scholar/.
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