BEHAVIORAL COMPONENTS IN RELATIONSHIPS OF ECONOMIC AGENTS (EXAMPLE OF THE UKRAINIAN CAR MARKET)

Glib Mazhara,Volodymyr Kapustian

doi:10.21303/2504-5571.2020.001184

Abstract

In neoclassical economics a concept of individual is seen as a logical thinking machine, which accurately analyzes all information received and, based on it, makes decisions that maximize his/her personal gain and minimize risks while achieving his/her goals. Such behavior of a person is called rational. Such concept serves as a source of neoclassicism for the construction of supply and demand models, operation of tax systems, business cycles, inflation etc. It was not accepted to pay attention to the psychology of decision-making, it was believed, that these transient, random factors pale against the grandeur of economic incentives. Psychologists are interested in solutions that are emotional, casual, pursued by some sort of cultural ideas, norms, rules, and may even be phobias, conversely economics is the science of rational behavior. The purpose of this paper is to identify and analyze the behavioral components and their influence on the interaction of economic agents in the commodity market. The study used methods of constructing a multivariate regression model, OLS, Student and Fisher criteria, statistical research, sociological surveys and expert opinion. Authors will analyze the behavioral aspects of market relationships on the example of used car market in Ukraine This paper provides several different situations and tested them with real market data to demonstrate that both buyers and sellers may not act rationally on the market, set prices, based on their personal beliefs, subjective and psychological factors and that must be considered when building economical models.

Highlights

For a long time, economists have all been dealing with a neoclassical mainstream economy that studies rational behavior
Behavioral economic originates from the second part of 20th century, the evidences of a better use of the behavioral approach than a classic economical models were formed in different branches such as firm [1], bank sector, monetary [2], investment [3], for the decision making process [4, 5]
In traditional economics it was not accepted to pay attention to the psychology of decision-making, it was believed that these transient, random factors pale against the grandeur of economic incentives

Summary

Introduction

Economists have all been dealing with a neoclassical mainstream economy that studies rational behavior Within this model, a person (more precisely, he/she will be called an economic person) is a rational mechanism. A person (more precisely, he/she will be called an economic person) is a rational mechanism It is guided only by its beliefs and has the usual framework on which (and taking into account available information) to make decisions. Sometimes authors are not interested in reasons, but just analyzing the data [10]; it has several weak points, first of all it is hard to understand what exactly leads to an increase or decrease of purchase. None of them was analyzing the non-verbal “communication” between sellers and consumer’s behavior, which is the purpose of this paper

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Conclusion