Behavioral Economics
The study of psychology as it relates to the economic decision-making processes of individuals and institutions.
109 topics found for
“economic decision-making”
Standard Economic Model
A theoretical framework in economics that assumes individuals act rationally and seek to maximize utility, used to predict economic behavior and outcomes.
System One
A mode of thinking, derived from Dual Process Theory, that is fast, automatic, and intuitive, often relying on heuristics and immediate impressions.
Take the Best Heuristic
A decision-making rule where individuals choose the option with the highest perceived value based on the first good reason that comes to mind, ignoring other information.
Satisficing
A decision-making strategy that involves choosing an option that meets the minimum requirements rather than seeking the optimal solution, balancing effort and outcome.
Expected Utility Theory
A theory in economics that models how rational individuals make decisions under risk by maximizing the expected utility of their choices.
Affect Heuristic
A mental shortcut where current emotions influence decisions, often bypassing logic and reasoning.
Opportunity Cost Neglect
A cognitive bias where individuals overlook or underestimate the cost of opportunities they forego when making decisions.
Bounded Rationality
A concept that humans make decisions within the limits of their knowledge, cognitive capacity, and available time, leading to satisficing rather than optimal solutions.