Initial Situation and Motivation
The topic of behavioral economics is interesting and relevant because it outlines the possibility of deploying mechanisms that could affect a number of essential business variables, such as labor markets, private finance, and personal health. Knowing that financial regulations and healthcare provisions are being developed at a rather high pace nowadays, it may be safe to say that many companies could benefit from behavioral economics. Since businesses have control over customer behaviors, they also have the opportunity to alter those activities in a way that would be more beneficial to every stakeholder, making it a win-win situation.
The Objective of the Work
The objective of the work is to conduct an empirical analysis of the effectiveness of behavioral economics while taking Netflix as an example of a company that perfectly understands the best ways to exploit this business phenomenon. The author expects to conduct a thorough analysis of secondary literature to make relevant conclusions concerning the value of the company’s operations. At the end of the paper, a list of potential recommendations will be included.
Research Questions
RQ1: Can Netflix consumers be affected by commitment devices during the company’s attempts to deploy new strategies? The rationale behind this research question is to explore if either the existence or the lack of self-control that leads customers to varied interactions with refunds could somehow benefit the organization.
RQ2: Does Netflix depend on the existence of market alternatives as a means of attracting more consumers and enforcing them into purchasing a subscription? The rationale behind this question is to investigate the relationship between the price of a subscription and the number of consumers that could pick Netflix as their primary service provider owing to certain tactics or amenities offered by Netflix that cannot be found in other companies.
Planned Methodological Approach
The author is going to deploy an empirical methodology and gain access to primary information (survey results) and secondary sources (literature review results). Secondary data will revolve around behavioral economics approaches applied by Netflix, and the survey will be conducted among Netflix customers to gain insight into their attitudes and knowledge. Survey results are going to be coded with the help of the SPSS software package.
Relevant Literature
In behavioral economics, an essential strategy is to improve outcomes by looking at the given issue from several different angles. Consumer decisions may be significantly impacted by the outlook developed by the company (Thaler 1280). Organizational performance cannot be viewed separately from consumer contribution since compliance with the latter is what could predict loss aversion and an improved position in the market. Another crucial insight is that collecting information that is not prominent does not represent a constructive research effort (Andor and Fels 181; Yoon and Kim 267). Without data that covers irrational consumer decisions, the company will be unlikely to engage in strategy updates that respond to consumer demand. Ultimately, social norms have to be respected when exploiting behavioral economics because every consumer is an independent entity, and they are moved by their utility function in most cases (Kanev and Terziev 417). Therefore, certain social norms could be seen as enough to enforce a different policy that would still be in line with consumer expectations but change their opinion regarding a product or service.
Schedule
Table 1. Project timeline.
Works Cited
Andor, Mark A., and Katja M. Fels. “Behavioral Economics and Energy Conservation – a Systematic Review of Non-Price Interventions and Their Causal Effects.” Ecological Economics, vol. 148, 2018, pp. 178-210.
Kanev, Dimitar, and Venelin Terziev. “Behavioral Economics: Development, Condition and Perspectives.” International E-Journal of Advances in Social Sciences, vol. 3, no. 8, 2017, pp. 413-423.
Thaler, Richard H. “From Cashews to Nudges: The Evolution of Behavioral Economics.” American Economic Review, vol. 108, no. 6, 2018, pp. 1265-87.
Yoon, K. Paul, and Won Kyung Kim. “The Behavioral TOPSIS.” Expert Systems with Applications, vol. 89, 2017, pp. 266-272.