A theoretical framework in economics that assumes individuals act rationally and seek to maximize utility, used to predict economic behavior and outcomes. Important for understanding traditional economic theories and designing systems that account for rational decision-making.
A theory in economics that models how rational individuals make decisions under risk by maximizing the expected utility of their choices. Essential for understanding decision-making under risk.
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.
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.
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.
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.
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.
A theoretical concept in economics that portrays humans as rational and self-interested agents who aim to maximize their utility. Important for understanding economic decision-making and designing systems that align with rational behavior.
A decision-making paradox that shows people's preferences can violate the expected utility theory, highlighting irrational behavior. Important for understanding inconsistencies in user decision-making and designing better user experiences.
A concept in behavioral economics that describes how future benefits are perceived as less valuable than immediate ones. Important for understanding user preferences and designing experiences that account for time-based value perceptions.
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.
A phenomenon where the winner of an auction tends to overpay due to emotional competition, leading to a less favorable outcome than anticipated. Important for understanding decision-making biases and designing systems that mitigate overbidding risks.
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.
The practice of organizing the context in which people make decisions to influence the outcomes, often used to nudge users towards certain behaviors. Crucial for designing user experiences that guide decision-making and improve outcomes.
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.
A cognitive bias where people attribute greater value to outcomes that required significant effort to achieve. Useful for designing experiences that recognize and reward user effort and persistence.
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.
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.
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.
A theory that describes how individuals pursue goals using either a promotion focus (seeking gains) or a prevention focus (avoiding losses). Crucial for designing motivation strategies and understanding user behavior in goal pursuit.
The study of how new ideas, products, and processes are developed and brought to market. Essential for fostering creativity and ensuring the continuous improvement and relevance of products.
The study of dynamic systems that are highly sensitive to initial conditions, leading to unpredictable behavior. Important for recognizing and managing unpredictable elements in design and development processes.
A mathematical framework used to analyze strategic interactions where the outcomes depend on the actions of multiple decision-makers. Useful for designing systems and processes that involve competitive or cooperative interactions.
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.
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.
A decision-making strategy that involves choosing an option that meets the minimum requirements rather than seeking the optimal solution, balancing effort and outcome. Important for designing user experiences that accommodate decision-making under constraints.
A strategy where less immediate or tangible rewards are substituted with more immediate or tangible ones to encourage desired behaviors. Important for designing systems that leverage immediate incentives to promote long-term goals.
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.
The value or satisfaction derived from a decision, influencing the choices people make. Crucial for understanding user preferences and designing experiences that maximize satisfaction.
An analysis comparing the costs and benefits of a decision or project to determine its feasibility and value. Important for making informed business and design decisions.
The value a brand adds to a product or service beyond the functional benefits, encompassing factors like brand awareness, perceived quality, and customer loyalty. Crucial for understanding the long-term value of a brand and its impact on business success.
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.
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. Crucial for understanding and designing for quick decision-making processes.
A social norm of responding to a positive action with another positive action, fostering mutual benefit and cooperation. Important for designing user experiences and systems that encourage positive reciprocal interactions.
A cognitive bias where people perceive an outcome as certain while it is actually uncertain, based on how information is presented. Crucial for understanding and mitigating biased user decision-making.
A heuristic where individuals evenly distribute resources across all options, regardless of their specific needs or potential. Useful for understanding and designing around simplistic decision-making strategies.
The way information is presented to users, which can significantly influence their decisions and perceptions. Important for designing messages and interfaces that guide user choices effectively.
Lifetime Value (LTV) is a metric that estimates the total revenue a business can expect from a single customer account throughout their relationship. Crucial for informing customer acquisition strategies, retention efforts, and overall business planning by providing insights into long-term customer profitability.
The worth of something based on its ability to help achieve a desired end or goal. Useful for understanding and prioritizing design elements that contribute to user goals.