Speaking from an engineering and (hopefully) entrepreneurial perspective, one of the reasons why work in the developing world is fascinating is the challenge it poses. Complex design requirements, non existent supply chain routes, extreme poverty – these are all unique issues that entrepreneurs have to combat when developing or producing products/services for the Bottom of the Pyramid.
But what happens when the your client base acts irrationally or doesn’t follow the ‘model’ you’ve based your business on? Enter Behavioral Economics. The title of Dan Ariely’s book sums up the behavior: “Predictably Irrational” .
Questioning economic models is nothing new. Tying these hypotheses with cognitive psychology has been around for some time. Yet, what makes Behavioral Economics exciting is the acceptance and adoption of BE models in economic or business policy. [A lengthy read, but a great primer on Behavior Economics can be found here.]
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