On the afternoon of March 12th, 2021, the 2nd Session of “The Economic Way of Thinking” Lecture Series was held in Auditorium 205 of the Central Main Building, with the theme of “Rational Thinking of Individual Decision-making”. The event was delivered by Prof. Wang Yong, Tenured Associate Professor of the School of Social Sciences, Tsinghua University to doctorate candidates of Institute for International and Area Studies, Tsinghua University (IIAS-THU).

Prof. Wang started the lecture with additional information on how to learn and build up the economic way of thinking explained in the first session. Afterwards, he elaborated value rationality and instrumental rationality in terms of instruments and value, cost-benefit analysis, equilibrium and margin. He also looked at consumption decision-making in relation to rational consumption decision-making and reasons of irrational consumption. In the first part of the lecture, Prof. Wang reviewed the relationships between value rationality and economic development, value rationality and personal growth, and value rationality and instrumental rationality. Later, he explored the concept of instrumental rationality based on cost-benefit analysis, opportunity cost, decision-making equilibrium and marginal analysis, and illustrated diminishing and increasing marginal utility with interesting and vivid cases. The second part of the lecture focused on the implication of consumption decision-making in terms of rationality and irrationality. He pointed out that rational consumption is based on the optimal budget of given preference utility, while cognitive limitation and limited rationality leads to seemingly irrational consumer behaviors.

In the Q&A session, Prof. Wang answered some questions about the concepts of endowment effect and psychological account. The doctorate candidates present commented Prof. Wang Yong’s lecture was highly inspiring.

Prof. Wang Yong is Tenured Associate Professor of the Institute of Economics at the School of Social Sciences, Tsinghua University and Member of the Academic Committee of IIAS-THU. Prof. Wang holds a PhD from Guanghua School of Management of Peking University and served as a postdoctoral fellow at Department of Economics of Harvard University. He was appointed as Deputy Director of the Institute of Economics at Tsinghua University in 2012 and further served as Executive Vice President of the Institute of Minsheng Economic Research at Tsinghua University. His research interest covers game theory and its applications, theories of Internet economy and enterprises and park economy.

Text by: Wang Zijing
Photography by: Wang Zijing