Behavioral economics combines insights from psychology and economics to understand how people make economic decisions. It challenges the traditional assumption that individuals are rational actors.
Key concepts in behavioral economics include heuristics, biases, and framing effects. These factors can lead to irrational decision-making, impacting everything from consumer behavior to investment choices.
Understanding behavioral economics can improve decision-making.
Behavioral economics has practical applications in various fields, including marketing, public policy, and finance, helping to design better systems that account for human behavior.