Last week, Monday, Professor Devin Pope from the prestigious Chicago Booth (University of Chicago), this year's Audi guest professor and key note speaker at the WFI Summer School 2018, was a guest at the WFI.
After a brief review of the field of behavioural economics, Pope presented three papers that show that people do not always behave as the homo oeconomicus of the neoclassical model; instead, their behaviour often depends on factors such as the personality of their counterpart, the first digit of the price or consumption or the weather. The first paper is about the role of the auctioneers in the auction of used cars to car dealers in the US. Pope was able to show that there are considerable differences between the prices achieved by each auctioneer, although it would be assumed that it does not make any difference to an informed audience by whom and in what form the cars are offered for auction. The second paper published by Pope explains the "digit bias", which shows the jumps in the price per kilometre of sales of cars. Customers are willing to pay significantly more for a lower mileage if it lies marginally beneath a threshold, e.g. marginally beneath 10,000. The third paper describes how the weather affects the purchase of convertibles. This close relationship between the weather and the number of convertible cars sold remains after adjusting for the seasonal component: Even in December, more convertible cars are sold on sunny days than in bad weather.
Among the guests of this fascinating lecture were students of the Summer School, who already knew Pope from the module "Negotiations and Behavioural Economics". Amongst other things, the students taking this module acquire competencies in the areas of negotiation strategies and processes as well as an understanding of the field of behavioural economics, and they also learn how to apply concepts from behavioural economics to business conditions and economic markets.
The Augsburger Allgemeine published an article about the lecture "Economics and Psychology: Lessons from the Car Market" of 18 July 2018.