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Lecture 1.

1. What is the connection between Communications + Economics?

- Purchasing decisions communcate demand

- Assymetry in information availability distorts these purchasing decision on the market, and it's important to eliminate it to get into market transparency that helps improve performance of markets, consumers get utility, companies get profits

- ?Something third?

2. The problem of communication in economics?

- cognitive limitations - limited information

Bounded rationality, consumer has preferences, certain information taking into consideration, and neoclassical economical theory usually uses this simplified models to describe the reality.

Unbounded rationality, a lot of information, unbounded.

So this information assymetry of what economics takes into consideration and what it actually is, is the main problem here of communication in economics. Now of course we do have access to information with the invention of Internet, but now it's hard to find it, which constraint to getting information (?not sure, but she said something like this i think

3. Behavioral economics

Behavioral economics is rather new and opposite to neoclassical theory, it aims to help and studies these dissonances in behavior, when what economical actor does and what we think (based on neoclassical theory?) he/she/they should do differ (? not sure, slides have this idea)

Cognitive biases, nudges

Important how we present information, how we frame it. Example below

The scenario you're referring to is known as the "Asian Disease Problem," a classic example illustrating the framing effect in decision-making. This problem was introduced by psychologists Amos Tversky and Daniel Kahneman in 1981 to demonstrate how different presentations of the same information can lead to varying choices.(

MDPI⁠

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Scenario:

Imagine that the U.S. is preparing for the outbreak of an unusual Asian disease, expected to kill 600 people. Two alternative programs to combat the disease have been proposed:(

MDPI⁠

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Program A: If adopted, 200 people will be saved.(

MDPI⁠

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Program B: If adopted, there is a 1/3 probability that all 600 people will be saved, and a 2/3 probability that no one will be saved.(

PubMed Central⁠

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When presented with this "gain-framed" version, a majority of participants preferred Program A, indicating risk aversion.(

MDPI⁠

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In a "loss-framed" version, the same scenario is presented differently:

Program C: If adopted, 400 people will die.(

PubMed Central⁠

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Program D: If adopted, there is a 1/3 probability that no one will die, and a 2/3 probability that all 600 will die.(

PubMed Central⁠

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In this framing, most participants preferred Program D, indicating risk-seeking behavior.(

Ideas To Go⁠

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These choices highlight how the framing of outcomes as gains or losses can significantly influence decision-making. The Asian Disease Problem has been widely studied and applied in various contexts to understand the impact of information presentation on choices. (

PubMed Central⁠

MDPI⁠

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4. Communication in saturated markets

We live in the time of abundance, paradise, available food 24/7. Overwhelming amount of food, information Saturated market is here market where is hard to penetrate and enter for new players

5. Naive eating

Naive eating, that we are fed, we do not have agency, autonomy to decide. This is her opinion, other colleagues do not agree. //I agree cause his individualistic, neoclassical bullshit in activism also washes kinda importance from systemic responsibility, and change of the system. not only choose for youself//

6. Why we need to communicate information?

//i think the main neoclassical justification of communication of information in economics, is to help overcome information assymetry, and help win in saturated markets, but that the hypothesis, based on what she presented and talked about, i need to google here// - just for company to sell more (?) - for sustainability reasons, choice towards more sustainable foods - for health reasons, to choose healthy food more - diet restrictions - food safety //but why we do not need information, maybe that's more important here, to focus on permanent systemic solutions, like limiting what kind of products can companies make to limit it for only one's that healthy. Then we do not need communication kinda? But then we are limiting the information exchange and we do not understand, what market demands, and what is important. Communciation = relationship//

7. ?Errors in communication -> Information avoidance

- olive oil (salds vs. frying) - various diets and other information that often contradicts each other?

- Non communicative diseases? //how this part is connected? information avoidance?//

8. In a nutshell

- we need to minimize information assymetry to achieve more mrket transparency - for better performance (companies?) - information percepton (signals/symbols, labels) - information processing

Communication and Economics?

From an economics perspective: − Information in the context of decision making − Improving market transparency

INFORMATION AND DECISION: ECONOMIC APPROACHES

Classical approach − Information improves market transparency. − Supports that consumers can choose those products that match their preferences. − Through purchase decisions consumers give signals to producers − Influence the composition of market supply. Information economics − Bounded rationality limits achieving market transparency − Limited opportunities for controlling attributes − search attributes − experience attributes − credence attributes − Operate with Asymmetric information= core problem − Focus: incentives to reduce asymmetric information

https://thedecisionlab.com/biases/bounded-rationality#:~:text=What%20is%20bounded%20rationality%3F,than%20the%20best%20possible%20decision⁠

Behavioural economics − Tries to increase the explanatory power of economics by integrating more realistic psychological foundations. − Tries to extend economic models, not abandon these. − Identifying deviations from and contradictions to economic assumptions − Identifying “biases” in decision making − Developing strategies for improving decision-making − Nudges

THE FAMOUS EXPERIMENT BY TVERSKY AND KAHNEMANN − If program A is adopted, 200 people will be saved. − If program B is adopted, there is a 1/3 probability that 600 people will be saved, and a 2/3 probability that no people will be saved. − If program A is adopted, 400 people will die. − If program B is adopted, there is a 1/3 probability that nobody will die, and a 2/3 probability that 600 people die.

Imagine that the US is preparing for the outbreak of an unusual Asian disease, which is expected to kill 600 people. Two alternative programs to combat the disease have been proposed. Assume that the exact scientific estimates of the consequences of the programs are as follows … Tversky, A and Kahneman, D (1981): The framing of decisions and the pychology of choice. Science, 211, 453-458

WHAT DO WE THINK? 90% Less Fat! 10% Fat!

Making purchase and nutritional decisions in saturated markets THE PARADISE: SATURATED FOOD MARKETS − Saturated food markets − Paradisiacal supply

NAIVE EATING: POSSIBLE CONSEQUENCES NCD - non-communicable diseases

What happens to consumers if they inform themselves about a healthy diet?

THE WORST ERRORS IN NUTRITION … • When you should not eat fruits • Why fat is good • Why potato chips do not make you fat

The more I learnt, the more questions I had

THE BACKGROUND − Need for unconsidered pleasure − food safety − enjoy food − Little knowledge about food production and food processing − Little knowledge about the impact of food on health and well being − Dissension within the scientific community − Big individual differences − Information overload / Choice overload Consumer Oriented Communication in the Food Sector - Introduction 27

The agony of choice − More choices are better and lead to better choices→ ?? − Choice overload − Information avoidance.

• Iyengar, S. and Lepper, M (2000) When Choice is demotivation: Can One Desire Too Much of a Good Thing? Journal of Personality and Social Psychology. Vol. 79/6 p955-1006. Available at:

https://faculty.washington.edu/jdb/345/345%20Articles/Iyengar%20%26%20Lepper%20(2000).pdf⁠

• Golman, Russell, David Hagmann, and George Loewenstein (2017): Information Avoidance. Journal of Economic Literature, Vol. 55/1, p96-135. Available at: Information Avoidance (jstor.org • Gigerenzer, G. and Garcia-Retamero, R. (2017): Cassandra’s Regret: The Psychology of Not Wanting to Know. Psychological Review, 124:2, p179-196

https://pure.mpg.de/rest/items/item_2404334/component/file_2420433/content⁠

• Gigerenzer, G., & Gaissmaier, W. (2011). Heuristic decision making. Annual Review of Psychology, 62, 451–482.

https://www.annualreviews.org/doi/pdf/10.1146/annurev-psych-120709-145346⁠

• Managing information overload by reducing complexity Scheibehenne, B.; Miesler, L. and Todd, P.M. (2007) Fast and frugal food choice: Uncovering individual decision heuristics. Appetite,43:3, p578-589

https://abcwest.cogs.indiana.edu/pmwiki/pdf/scheibehenne.appetite.2007.pdf⁠

COMMUNICATION AND ECONOMICS: How to deal with Complexity?

From information to action: Rules of thumb

− He/she, who knows little − cannot judge arguments − has to decide whom to trust − cannot be persuaded in the long term − maybe afraid of many things − often think they know what good professional practice − can hardly estimate consequences − Whoever has an opinion does not necessarily have knowledge.

IN A NUTSHELL − Communication in information economics→ providing information→ increase market transparency and improve performance. − Communication in the food sector takes place in an environment of − saturated markets with paradisiacal supply − information overload − choice overload. − Information can be ambiguous and incomplete. − To understand the impact of communication→ closer look at: − perception and − processing. − Communication requires a set of signs and symbols with a commonly agreed meaning. Consumer Oriented Communication in the Food Sector – Introduction 34

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