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.
39 topics found for
“economic theory”
Expected Utility Theory
A theory in economics that models how rational individuals make decisions under risk by maximizing the expected utility of their choices.
Behavioral Game Theory
The study of strategic decision making, incorporating psychological insights into traditional game theory models.
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.
Scarcity Principle
The economic theory that suggests limited availability of a resource increases its value, influencing decision-making and 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.
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.
Homo Economicus
A theoretical concept in economics that portrays humans as rational and self-interested agents who aim to maximize their utility.
Allais Paradox
A decision-making paradox that shows people's preferences can violate the expected utility theory, highlighting irrational behavior.