Explain the concepts of loss aversion, value attribution, and group dynamics. In economics and decision theory, loss aversion refers to people's tendency to strongly prefer avoiding losses to acquiring gains. Group dynamics refers to a system of behaviors and psychological processes occurring within a social group or between social groups. Value attribution is the value set forth in each of these terms; meaning the value of the loss can be a good thing for someone to later gain and the value of a group to work together, teamwork. An economic principle is that markets will act in rational ways.
Companies will know where they can maximize these profits. Also consumers spending can be predicted off what provides the greatest utility or satisfaction. Because of the laws of supply and demand, it is better understood when to produce or offer goods and services and when it is better to produce
The theory is that jobs are lost when we are tempted by cheap foreign goods. The true effect of protectionism is it reduces consumer choice, raises prices of protected foreign products and domestic goods. This lowers worldwide production and may save some jobs in a specific industry within America but this comes at an expense of the total welfare of the country. Free trade would provide lower prices, higher-quality goods, economic growth, and competition. This policy eliminates competition and competition is needed for a balanced economy.
Scholars such as Friedman suggest that treating the economic responsibility as the most important responsibility of a business, is called a profit-maximising view, and “the social responsibility of a business is to increase its profits.” This kind of view states that a company should be operated on a profit-orientated basis, with its sole mission being to increase profits. This approach would seem to benefit stockholders, as well as stakeholders, as the stockholder is going to benefit from the profit made by the company and will gain something back from the company, however problems can occur when the businesses and companies do not balance their ethical responsibility, as they can therefore be perceived as greed and unable to balance their corporate social responsibility, and will cause a bad name for a business. So although the stockholder may also be gaining profit by doing this (what the company sees as doing the right thing) is not necessarily the right thing to do in terms of stakeholders. However, Friedman would argue that as long as the business is maximising its profit, that is the main point and so the loss of the stakeholders is less important. This argument can be deemed as weak as Friedman’s approach does not mean that stakeholders can be benefited alongside stockholders, and so disagrees with
In short, consequentialism is the decision is ethical if the positive outcome is greater than the negative outcome. Deontology is the ethical theory that is concerned with duties and rights. Whereas consequentialism is concerned with actions consequences, deontology is concerned with the obligation or duty motivating the decision (Brooks, 2007, p. 330). Decisions are based around moral standards, rights, fairness, and principles. Scenario 1 The consequentialism approach is in favor of economic prosperity; the most favorable consequence for the greatest amount of people.
Rational people think in the margins is simply means the purchase of a good is based on the marginal benefit the purchase will have for the person. A marginal increase in a person’s water supply rarely comes at a significant cost to the person, however, a marginal increase in diamonds is extremely valuable(Gregory, 2008). People respond to incentives. This is when consumer’s decision is based on what the seller is offering as an incentive to buy their products. Incentives can come in the form of rebates, coupons, or lower interest rates.
Incentives are offered to people in order to induce them to make certain choices or behave in a certain way. They can be either positive or negative. For example, positive incentives like discounts and rewards are beneficial; whereas negative incentives such as fines and penalties are not. Understanding how people respond to both positive and negative incentives is important in analyzing how society operates as a whole. Ultimately, it can be argued that “incentives are the cornerstone of modern life” (Levitt, 12), and having a grasp of this concept is a key to solving social and economic riddles.
As John Verdant introduces two families with similar economic conditions but completely different values, it is not difficult to find out that the family believes having more actually harms themselves (Verdant, 152-155). I believe people who are less obsessed with consumerism would have a better living standards if they were living in a society with scarce materials. However, those people who are obsessed with consumerism would be willing to conduct some unethical things in order to gain self-interested benefits. On the other hand, nowadays thrift is a way of showing a person is well-educated and money-conscious. In fact thrift is highly valued in many Asian countries’ value systems.
There is an ethical and moral assumption that governmental policy attempts to benefit the public by providing a high ‘quality of life’. Most governments attempt to offer its citizenry a broad range of policies that will ensure both a stable economy and agreeable social conditions. However, if we accept that governmental policy is aimed at increasing the quality of life, then there must be measurable indicators that represent these attempts. Quite often the most accepted measure of ‘quality of life’ is the amount of money an individual has and the access he or she has to goods and services. Current economic indicators represent a wide range of demographic, financial and market driven measurements.
To calculate the actual ROI from Travel Agents' efforts, simply deduct the cost of social media work (include monetary and time investments) from the income generated. If the result is a positive number, the investment has been profitable; if not, the marketers must revisit their campaigns to see what is working and what is not. Also, pay attention to which sites are generating the most value. Not all businesses can beneficially engage all types of social media; focus on the ones that work successfully. Effective measurement is the key to improving satisfaction and loyalty rates and revenue (Wigmo and Wikstrom,