When it comes to economic theories, there is plenty of fascination in the business world around how to explain what drives business and purchasing activities. Behavioural economics, the field of economics concerned with examining why people behave the way they do when it comes to their purchasing behaviour, is hot right now. Bestselling books like Freakonomics and Predictably Irrational dig deep into the psyche of people to try and explain seemingly illogical actions.

Here are the four key principles of Delusional Economics, and how you might avoid applying them to your own small business:

1. Change a customer’s worldview

2. Getting people to pay for something that is currently free

3. Basing a business model on revenue from nonexistent advertisers or customers

4. Overestimating a customer’s ability to appreciate value worth paying a premium for

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Source: OPEN Forum

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