PSYCHOLOGY of ECONOMICS (Business psychology) - What will you learn if you study ...?

psychology is much more important for economy than most people think it begins for example with recruitment the question how do i get the right person for a particular job which of course is not only important for the company but also for the person herself because if you get a job that doesn't fit your abilities chances are that you are getting stressed out you are dissatisfied and maybe you even develop burnout and very large studies from psychologists could show that in recruitment for example assessment centers which are are widely used and are very expensive are actually not very effective to predict job success and even the normal job interviews are also not the best method the best method in fact are cognitive tests intelligence tests those really predict best who is going to perform best in a job but of course also the psychology of advertising is very important for people who are working in the economy because if you have very good product you also want to be able to sell your product and one psychological effect which of course is very important in this area is the so-called mirror exposure effect which means that the more often you are exposed to a stimuli the more attractive it becomes to you and funny enough this does not only work with products but also for example with music and you probably experienced it yourself the first time you heard a new song from your favorite artist you didn't like it that much but the more often you hear it the more you like it but the mere exposure effect even works with people so there is a funny study conducted by moorland and beach in 1992 in which four female students were asked to go in a lecture but at a different frequency and it could be shown that even though those female students were rated of the same attractiveness before the study when the other students who were also in this lecture were asked afterwards well how attractive do you think those female students are it could be shown that those female students who were more often in the lecture were rated more attractive and the reason why the mirror exposure effect works is probably also an evolutionary one because the more often we see something the more familiar we get with it and the less our brain has to work to realize what it is and our brain really is quite lazy so it really loves if it can process things quite fluently and the more often our brain sees a stimulus the more easy it can be processed and this creates a positive feeling and therefore we like the person or maybe the object which is just shown to us in an advertisement another area in which psychology plays a very important role are negotiations because on the one hand psychologists found a lot of techniques which can be used to increase the ability that another person agrees on your request like for example the evoking freedom technique which means that after your request you put the phrase but of course you are free to accept or to refuse and if you put for example this phrase after your request chances are increased that the other person will agree on your request but there are also other techniques that increase your chances which are almost subliminal like for example verbal mimicry or verbal mirroring which means that you paraphrase or use the same phrases that the other person uses and in one study it could be shown that for example when the service personal of a restaurant was using this technique when taking the orders and the customer was saying i would like to have the french fries and the coke and when she mirrored what he said by saying okay the french fries and the coke whereas in another condition she was just saying okay thank you her chances to get higher tips were increased and this is just one result in which could be shown that this kind of mirroring and even non-verbal mirroring if you mirror the body language of somebody increases your chances but also when it comes to price negotiations it could be shown that psychological effects like for example anchoring plays a very important role and studies could show that it is very important that you make the first offer and that you choose the number in this offer as high as possible because you put a very high anchor in the mind of your negotiation partner and later on you can still go down with the price on the other hand and this is very interesting it could be shown that if you choose a quite specific price like for example you are selling a house and you say well i want 525 000 euros for the house it's better to name this specific price instead of saying well i want 500 000 euros because if you choose a specific price the other person thinks well probably he chose this price for a reason probably there is a good reason why this price is justified so there are really a lot of areas in which psychology plays a very important role in economics and therefore it's no wonder that in 2002 daniel kahneman the first psychologist ever got the nobel prize for economics i hope you enjoyed this episode and if you want we'll see you next time