Are You Rational Or Irrational?

Nowadays, in the world of perfect information, globalization and low transaction costs, we always try to maximize result. What do you think so? Let s say you get a hint for some horse race, you bet and you win. If there would be way that you can get again hint, you would like to get it, wouldn’t you? I would, that is why we are driven by maximizing results.

I have read in book Drive by Daniel Pink, that winner of Nobel prize Kahneman agreed that economics is study of human economic behavior. However we believe that we had placed too much emphasis on the economics and not enough on the human. I agree since all we learn are just theories, numbers, figures, graphs but nothing about human behavior.

There is a test: Imagine I can give you $10 and you decide whether you want share some, none or all based upon my instructions. So let s begin. If I offered you $6 (which means $4 you would have to give away), you would accept it? If I offered you $5 (you would have to give away $5), you would take it too, right? But what if I offered you just $2 from $10 (you would have to give away $8), would you take it? I wouldn’t, I have to admit. So let me know if you would take it or you wouldn’t.

Experiment says that the most people rejected. But think about it for while. If you took offer, you would have 2 usd more. If you reject, you get nothing. Cognitive mind know $2 is more than $0 but because we are human beings, our desire to have more, desire to win overrides it. That is why human behavior in economics is more important than just economics.

So If I can sum it up. It means

 "we are irrational even we think we are rational." 

So you might thinking I am rational, but are you? Sometimes just let it go with flow because you will not find rational decision anyway. Let me know what you think about.