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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.
Higher total scores indicate higher psychological well-being. Following are explanations of each criterion, and an example statement from the Ryff Inventory to measure each criterion. Autonomy: High scores indicate that the respondent is independent and regulates his or her behavior independent of social pressures.
An economic example is the Dixon model of an economy consisting of many firms operating in different industries, where each industry is a duopoly. [22] The endogenous aspiration level is the average profit in the economy.
Reference dependence is a central principle in prospect theory and behavioral economics generally. It holds that people evaluate outcomes and express preferences relative to an existing reference point, or status quo. It is related to loss aversion and the endowment effect. [1] [2]
The economics of happiness or happiness economics is the theoretical, qualitative and quantitative study of happiness and quality of life, including positive and negative affects, well-being, [1] life satisfaction and related concepts – typically tying economics more closely than usual with other social sciences, like sociology and psychology, as well as physical health.
The mythological Judgement of Paris required selecting from three incomparable alternatives (the goddesses shown).. Decision theory or the theory of rational choice is a branch of probability, economics, and analytic philosophy that uses the tools of expected utility and probability to model how individuals would behave rationally under uncertainty.
An economic impact analysis is commonly developed in conjunction with proposed legislation or regulatory changes, in order to fully understand the impact of government action on the economy. The United States Department of Energy economic impact model is one example of this type of application. [16]
An example of a descriptive device used in psychological research is the diary, which is used to record observations. There is a history of use of diaries within clinical psychology . [ 20 ] Examples of psychologists that used them include B.F. Skinner (1904–1990) and Virginia Axline (1911–1988).