Please use this identifier to cite or link to this item: http://hdl.handle.net/1946/9805
Behavioral economics and the Icelandic economic wonder : is it in our nature to make irrational decisions?
Is it in out nature to make irrational decisions? This research is done after the
economic collapse in Iceland in 2008 and in the midst of a following recession. This
research looks at decision-making in economic context using the discipline of
behavioural economics. It puts forth an argument that we are pre-determined to make
irrational decisions that are systematic and can therefore be predicted. This research
looks to Iceland and uses examples of Icelandic economic and political life in the
years 2006-2008 to demonstrate that important factors leading to the collapse were
due to predictably irrational decisions. The hypothesis of this research is therefore that
Iceland’s collapse could have been predicted and potentially avoided. The research
shows that the hypothesis is only partially true, whereas the economic collapse could
have been predicted but, on the other hand very unlikely to be avoided due to
society’s myopic view towards its own success and in general a rather hostile
behaviour towards those that put forth criticism.