Behavioral Economics
The study of psychology as it relates to the economic decision-making processes of individuals and institutions. Essential for understanding and influencing user decision-making and behavior in economic contexts.
98 topics found for:
“economic psychology”
Behavioral Finance
The study of how psychological influences affect financial behaviors and decision-making. Essential for understanding and influencing financial decision-making and behavior.
Paradox of Value
An economic theory that explains why some necessities, such as water, are less expensive than non-essentials, like diamonds, despite their greater utility. Useful for understanding consumer behavior and designing pricing strategies.
Mental Accounting
A behavioral economics concept where people categorize and treat money differently depending on its source or intended use. Crucial for understanding financial behavior and designing systems that align with users' mental accounting practices.
Negativity Effect
The tendency for negative information to have a greater impact on one's psychological state and processes than neutral or positive information. Important for understanding and mitigating the impact of negative information.
Pain Of Paying
The psychological discomfort experienced when parting with money, influenced by the payment method and context. Crucial for understanding spending behavior and designing payment systems that mitigate discomfort.
Sunk Cost Fallacy
The tendency for individuals to continue a behavior or endeavor as a result of previously invested resources (time, money, or effort) rather than future potential benefits. Important for understanding decision-making biases and designing systems that help users avoid irrational persistence.
Optimism Bias
A cognitive bias that causes people to believe they are less likely to experience negative events and more likely to experience positive events than others. Crucial for understanding user risk perception and designing systems that account for unrealistic optimism.
Risk-as-Feelings Theory
A theory that emphasizes the role of emotions in risk perception and decision-making, where feelings about risk often diverge from cognitive assessments. Important for designing systems that account for emotional responses to risk and improve decision-making.
Gambler’s Fallacy
A cognitive bias where individuals believe that past random events affect the probabilities of future random events. Important for designers to understand user decision-making biases related to randomness.
Subadditivity Effect
A cognitive bias where the total probability assigned to a set of events is less than the sum of the probabilities assigned to each event individually. Important for understanding how users estimate probabilities and make decisions under uncertainty.
Myopic Loss Aversion
A cognitive bias where individuals tend to avoid risks when they perceive potential losses more acutely than potential gains. Important for understanding decision-making behavior in users and designing systems that mitigate risk aversion.
Behavioral Game Theory
The study of strategic decision making, incorporating psychological insights into traditional game theory models. Useful for understanding complex user interactions and designing systems that account for strategic behavior.
Prospect Theory
A behavioral economic theory that describes how people choose between probabilistic alternatives that involve risk, where the probabilities of outcomes are known. Crucial for understanding decision-making under risk and designing systems that align with user behavior.
Loss Aversion
A cognitive bias where the pain of losing is psychologically more powerful than the pleasure of gaining. Important for designing user experiences that account for and mitigate loss aversion.
Bandwagon Effect
A psychological phenomenon where people do something primarily because others are doing it. Important for understanding social influences on user behavior and trends.
Scarcity Principle
The economic theory that suggests limited availability of a resource increases its value, influencing decision-making and behavior. Important for creating urgency and increasing perceived value in marketing.
Scarcity
A psychological principle where people place higher value on objects or opportunities that are perceived to be limited or rare. Important for understanding consumer behavior and designing marketing strategies that leverage perceived scarcity.
MINDSPACE
Messenger, Incentives, Norms, Defaults, Salience, Priming, Affect, Commitment, and Ego (MINDSPACE) is a framework used to understand and influence behavior. Crucial for designing interventions that effectively influence user behavior.
Relativity
A principle often used in behavioral economics that suggests people evaluate options based on relative comparisons rather than absolute values. Important for understanding decision-making and designing choices that highlight beneficial comparisons.
Availability Bias
A cognitive bias where people overestimate the importance of information that is readily available. Essential for designers to understand and mitigate how easily accessible information can disproportionately influence decisions.
Anchoring
Anchoring (also known as Focalism) is a cognitive bias where individuals rely heavily on the first piece of information (the "anchor") when making decisions. Crucial for understanding and mitigating initial information's impact on user decision-making processes.
Focusing Effect
A cognitive bias where people place too much importance on one aspect of an event, causing errors in judgment. Important for understanding decision-making and designing interfaces that provide balanced information.
Ambiguity Effect
A cognitive bias where decision-making is affected by the lack of information or uncertainty. Important for understanding and mitigating user decision-making biases due to uncertainty or lack of information.
Worse-Than-Average Effect
A cognitive bias where individuals underestimate their own abilities and performance relative to others, believing they are worse than average. Important for understanding self-perception biases among designers and designing systems that support accurate self-assessment.
Denomination Effect
A cognitive bias where people are less likely to spend large denominations of money compared to an equivalent amount in smaller denominations. Useful for designers to understand consumer behavior and design pricing strategies that consider spending biases.
Incentive Theory
A theory of motivation that explains behavior as driven by a desire for rewards or incentives. Crucial for designing systems that effectively motivate and engage users.
Anchor Pricing
A pricing strategy where a high-priced option is introduced first to set a reference point, making other options seem more attractive in comparison. Important for shaping user perceptions of value and creating a benchmark for other pricing options.
Overconfidence Effect
A cognitive bias where a person's subjective confidence in their judgments is greater than their objective accuracy. Crucial for understanding user decision-making and designing systems that account for overconfidence.
Zero Price Effect
A phenomenon where people perceive an item as more valuable when it is free, leading to an increased likelihood of choosing the free item over a discounted one. Important for understanding consumer behavior and designing effective marketing strategies.
System One
A mode of thinking, derived from Dual Process Theory, that is fast, automatic, and intuitive, often relying on heuristics and immediate impressions. Important for understanding how users make quick decisions and respond to design elements instinctively, aiding in the creation of intuitive and user-friendly interfaces.
Chivas Regal Effect
The phenomenon where higher-priced products are perceived to be of higher quality, regardless of the actual quality. Useful for understanding consumer perceptions and designing effective pricing strategies.
Certainty Effect
A cognitive bias where people give greater weight to outcomes that are certain compared to those that are merely probable. Important for designers to consider how users weigh certain outcomes more heavily in their decision-making.
Bundling Bias
A cognitive bias where individuals evaluate the value of bundled items differently than they would if the items were evaluated separately. Important for understanding user behavior and designing effective product bundles and pricing strategies.
BeSci
Behavioral Science (BeSci) is the study of human behavior through systematic analysis and investigation. Essential for understanding and influencing user behavior in design and product development.
Licensing Effect
A cognitive bias where people allow themselves to indulge after doing something positive, believing they have earned it. Important for understanding user behavior and designing systems that account for self-regulation.
Reference Dependence
A cognitive bias where individuals evaluate outcomes relative to a reference point rather than on an absolute scale. Essential for understanding decision-making and consumer behavior.
Impact Bias
The tendency to overestimate the duration or intensity of the emotional impact of future events. Important for understanding user expectations and satisfaction.
Hyperbolic Discounting
A cognitive bias where people disproportionately prefer smaller, immediate rewards over larger, later rewards. Important for understanding and designing around user decision-making and reward structures.
Authority Principle
A principle that suggests people are more likely to comply with requests or follow suggestions from authority figures. Important for designing persuasive experiences and understanding user compliance.
Escalation of Commitment
A cognitive bias where individuals or organizations continue to invest in a failing project or decision due to the amount of resources already committed. Important for designers to recognize and mitigate their own risks of continuing unsuccessful initiatives.
Endowment Effect
A cognitive bias where people ascribe more value to things merely because they own them. Useful for understanding user attachment and designing persuasive experiences.
Status Quo Bias
A cognitive bias that leads individuals to prefer things to remain the same rather than change, often resisting new options or changes. Crucial for understanding resistance to change and designing strategies to overcome it among users.
Cold States
Emotional states where individuals are calm and rational, often contrasted with hot states where emotions run high. Important for understanding decision-making processes and designing experiences that accommodate both states.
Representativeness
Representativeness is a heuristic in decision-making where individuals judge the probability of an event based on how much it resembles a typical case. Crucial for understanding biases in human judgment and improving decision-making processes.
Regret Aversion
A tendency to avoid making decisions that might lead to regret, influencing risk-taking and decision-making behaviors. Crucial for understanding decision-making processes and designing systems that minimize regret.
Hot Hand Fallacy
The mistaken belief that a person who has experienced success in a random event has a higher probability of further success in additional attempts. Crucial for understanding and designing around user decision-making biases.
Probability Matching
A decision-making strategy where individuals allocate resources proportionally to the probability of an outcome occurring, rather than optimizing the most likely outcome. Important for understanding decision-making behaviors and designing systems that guide better resource allocation.
Peak End Rule
A cognitive bias where people judge an experience largely based on how they felt at its peak (most intense point) and its end, rather than the total sum of the experience. Crucial for designing memorable and satisfying user experiences.
Omission Bias
A cognitive bias where people judge harmful actions as worse, or less moral, than equally harmful omissions (inactions). Important for understanding user decision-making and designing systems that mitigate this bias.
Normalcy Bias
The tendency to believe that things will always function the way they normally have, often leading to underestimation of disaster risks. Important for understanding risk perception and designing systems that effectively communicate potential changes.
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. Crucial for designing systems and processes that account for human cognitive limitations and decision-making processes.
Intertemporal Choice
The study of how people make choices about what and how much to do at various points in time, often involving trade-offs between costs and benefits occurring at different times. Crucial for designing systems that account for delayed gratification and long-term planning.
Pseudo Set Framing
The cognitive bias where people treat a set of items as more significant when they are perceived as a cohesive group. Important for understanding user perception and decision-making.
Hedonic Adaptation
The observed tendency of humans to quickly return to a relatively stable level of happiness despite major positive or negative events or life changes. Useful for designing experiences that maintain user engagement and satisfaction over time.
Decision Theory
The study of how individuals make choices among alternatives and the principles that guide these choices. Important for designing decision-making processes and interfaces that help users make informed choices.
Availability Heuristic
A mental shortcut that relies on immediate examples that come to mind when evaluating a specific topic, concept, method, or decision. Crucial for understanding how people make decisions and the biases that influence their choices.
Persuasion Architecture
A strategic framework that designs user experiences to guide behavior and decisions towards desired outcomes. Crucial for creating effective and ethical influence in digital interfaces.
Affective Forecasting
The process of predicting how one will feel in the future, which often involves biases and inaccuracies. Important for understanding user behavior and decision-making, aiding in the design of better user experiences.
Extension Neglect
A cognitive bias where people ignore the relevance of sample size in making judgments, often leading to erroneous conclusions. Crucial for designers to account for appropriate sample sizes in research and analysis.