Question

With behavioral economics in mind, cite one of the “common mistakes in economic decision-making” and apply it to a simple example from your own experience.

Answer 1

One common mistake in economic decision making is the' do or die mentality' that most people have. We all live in a world where everyone is in a haste to do their work. Everyone wants to get the maximum returns with minimal effects. People tend to forget about analysing what they are going to do. We need to realise that every decision we make is temporary. Conditions change and you can always change your actions and mind later. Time and money may be lost but will be better. If you want your business to last for a long time use a decision making strategy that will be used for a long time.

The one time I did this was hurrying in making a website. Blogging not only lets you do what you love but also helps in earning some money. The road is difficult and requires regularity. In a haste and pressure from around me, I made a website, buying my domain name and themes. It was a do or die state for me as all my fellow friends were doing something or the other, whereas I was doing nothing. I made quite a good website. Worked very hard for a few days investing my time and energy and of course money in it. But soon I realised I had no strategy made up the future. In haste I had not planned much about what I was really going to do. So I decided to quit. But gradually I learnt about social media marketing and how powerful social media can be. So I made a strategy on how to work for it, started working on my website again and soon it starting yielding returns.

The hasty decisions we make in life can be hazardous for us. They might make us worse off. Having a proper planned up strategy is a must if you want to have a long term business. And yes of course hard work is important too.