The Human Factor

The Human Factor: How do Emotions, Mental Models and Culture Shape Market Decisions?

“Human nature is not a problem that can be fixed by rules and regulations. All solutions to the existing problems must be based on how people behave, not on how we think they should behave.” Kirk Chisholm

Decades of research have produced increasing evidence that undermines the concept of homo economicus: The assumption that one can approach human decision-making via expected utility maximization does not reflect reality. In order to understand, anticipate and improve decisions, wishful thinking and obsolete models must be replaced with a realistic understanding of how decisions are made by consumers and companies. Human decision-making behavior is often driven by mental models. Decisions are not made in isolation: Culture and social environment – where we grow up and where we work – influence the decision-making processes.

At NIM, we analye with how people behave when they have limited time and limited cognitive resources, and how they make decisions. This includes analysis of potential decision errors or flaws, as well as the processes by which human cognition adapts to and uses information in a constantly changing environment. A variety of research questions have arisen from this, which researchers at NIM are evaluating: