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Behavioral economics is the study of the psychological (e.g. cognitive, behavioral, affective, social) factors involved in the decisions of individuals or institutions, and how these decisions deviate from those implied by traditional economic theory. [1] [2] Behavioral economics is primarily concerned with the bounds of rationality of economic ...
In psychology and behavioral economics, the endowment effect, also known as divestiture aversion, is the finding that people are more likely to retain an object they own than acquire that same object when they do not own it.
Prospect theory is a theory of behavioral economics, judgment and decision making that was developed by Daniel Kahneman and Amos Tversky in 1979. [1] The theory was cited in the decision to award Kahneman the 2002 Nobel Memorial Prize in Economics .
Behavioral game theory seeks to examine how people's strategic decision-making behavior is shaped by social preferences, social utility and other psychological factors. [1] Behavioral game theory analyzes interactive strategic decisions and behavior using the methods of game theory , [ 2 ] experimental economics , and experimental psychology .
Since voter behavior influences public officials' behavior, public-choice theory often uses results from social-choice theory. General treatments of public choice may also be classified under public economics. [7] Building upon economic theory, public choice has a few core tenets. One is that no decision is made by an aggregate whole.
Behavioral economics and public policy is a field that investigates how the discipline of behavioral economics can be used to enhance the formation, implementation and evaluation of public policy. [ 1 ] [ 2 ] Using behavioral insights, it explores how to make policies more effective, efficient and humane by considering real-world human behavior ...
The same change in price framed differently, for example as a $5 discount or as a $5 surcharge avoided, has a significant effect on consumer behavior. [16] Although traditional economists consider this " endowment effect ", and all other effects of loss aversion, to be completely irrational , it is important to the fields of marketing and ...
In the context of behavioral economics, time inconsistency is related to how each different self of a decision-maker may have different preferences over current and future choices. Consider, for example, the following question: (a) Which do you prefer, to be given 500 dollars today or 505 dollars tomorrow?