Is behavioral economics important to innovation?
As a study so far popularized by books like Steven D. Levitt and Stephen J. Dubner’s bestseller, Freakonomics, could closer attention to behavioral economics be beneficial when attempting to build an innovation ecosystem?
The key element to the study is examining why people act in the way they do. An action taken by a person can be explained as a response to a motivation or incentive. The limits of these are not financial, but include the likes of social, health and moral incentives as well, or even a combination of them, either positive or negative. For example, a person may choose not to take drugs for the fourfold incentive that they are expensive to buy, they know it can be damaging to their health, there is a chance that they may be looked down upon by their peers in social groups, and lastly there is a strong risk of heavy punishment if they are caught by the authorities.