Business

Last updated: 1 may, 2009 - 16:47 GMT

Understanding the things we do for money

dollars being counted

Do we act differently when the folding stuff is for real?

Money addles the brain, we know that - the things people do for money. But does it addle economics?

Does it make some of the conventional rules of economics like supply and demand out of date?

One American economist from MIT and now Duke University in North Carolina, thinks it does.

Dan Ariely has done a string of experiments to show how people actually behave.

He finds that they don't behave like the economically rational person that economic theory assumes.

Some people, for example, will do things for no payment that they refuse to do when there is a small payment on offer. Very high bonuses can make for a worse performance.

Dan's discipline is called "behavioural economics" and it's the bright new thing. He calls it all "predictable irrationality". What does he mean by that?

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First broadcast on Business Daily on 4 May 2009

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