Microeconomic issue- halo effect Essay Example | Topics and Well Written Essays - 750 words

Micro scotch issue- halo essence - Essay Examplensumers tend to associate the positive fiber of a per give-and-takealitys image with a point of intersection and its brand, and since consumers have aspirations and desires, the seller hopes that the image associated with the product is powerful enough for the consumer to take action first, to desire the satisfaction associated with the image, and second, to think that the product and brand relate to the image would be the means to achieve that satisfaction. This association between a persons written report and his words and actions is what the aureole Effect is all about (Economist.com).Thorndike in a 1920 study observed the Halo Effect at work in a study involving soldiers and the way they rated their officers. He discovered that when soldiers viewed their officer in a positive way, all the officers actions are viewed positively. This is the way a son would treat the punishment from a father whom the son admires every punishmen t is for the sons good, no matter how unjust the punishment may seem to an outside observer.Applied to microeconomics and the behavior of firms and consumers, the halo effect can be observed at work in many instances. In fact, the global economic crisis may have been caused by the halo effect, and the same halo effect is being used to communicate the world out of the crisis. Rosenzweig, writing in the McKinsey Quarterly, observed how the halo effect could explain both blood success and failure, emphasizing the importance of consumer or observer perception in determining economic behavior.Among the nuisance stories associated with the crisis, the investment scam of Madoff shows how the halo effect contributed both to his success and failure. Madoff was an investment banker who served as the Chairman of NASDAQ, the nonprescription(prenominal) stock market that boomed in the late 1990s. According to the New York Times, Madoff was able to head NASDAQ because of his high-profile life style and muted consistency in generating above-average returns for investors. His