Behavioral Tourism Economics

Abstract

Recently, many applications of behavioral economics (BE) have arisen from the union of psychology and of economics in many areas including product marketing (Thaler (2015), policy design (Madrian (2014), and Howlett (2019). Some examples are nudge units, which prestigious international institutions such as OECD (2017) or governmental ones (the Behavioral Insight Team (BIT) of the UK Government or the Behavioral Economic Team of the Australian Government (BETA) have established. This article first presents a systematic treatment of the main contributions of the literature on the subject with particular reference to heuristics, Kahneman (2003) and Shah and Oppenheimer (2008), and the cognitive biases Ariely (2008) and about its future trends Stjepanovic and Mihic (2018). Secondly, this paper considers real world situations to study the feasibility of BE as an instrument for describing the decision making process for tourists, entrepreneurs in the tourism sector, and how BE is used for marketing tourism products and policy design in the tourism sector. For this purpose, three case studies are examined as follows: 1. ‘Loss Aversion’ bias can affect decision-making in the tourism sector (tourists tend to give more emphasis on what may go wrong and prefer the default option rather than risk a little and choose something new); 2. ‘Scale Perception Bias’ in Tourist Satisfaction Surveys can give biased results and negatively affect entrepreneurs choices; 3. ‘Nudge approach’ (Thaler and Sunstein (2008) and Sunstein and Reisch (2017)) can is used to lessen the environmental impact of over tourism. Those instances, of what I label as Behavioral Tourism Economics on the basis of the literature on the topic (Nikolova (2019)), will show that the consideration of behavioral issues into the study of Tourism Economics will increase the explanatory power of traditional models.