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An example of behaviour inhibited by heuristics can be seen when comparing the cognitive strategies utilised in simple situations (e.g. tic-tac-toe), in comparison to strategies utilised in difficult situations (e.g. chess). Both games, as defined by game theory economics, are finite games with perfect information, and therefore equivalent. [10]
Cognitive depletion When a person has to make difficult or complex choices Cognitive overload Being challenging for a person to make rational choices because of the complexity of the choice Framing How a choice is described is called framing. If a choice is framed in more positive ways, it is easier for a person to make that choice
An example in economic policy, economist Anthony Downs concluded that a high income voter ‘votes for whatever party he believes would provide him with the highest utility income from government action’, [19] using rational choice theory to explain people's income as their justification for their preferred tax rate.
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 ...
An example is the performance advantage attributed to golf rounds where a player is under par (or in a disadvantage) compared to other rounds where a player is at an advantage. [37] Clearly, the difference could be attributed to increased attention in the former type of rounds. 2010s studies suggested that loss aversion mostly occur for very ...
Scarcity heuristic: A cognitive bias where people assign greater value to items or events that are perceived to be in limited supply. This mental shortcut assumes that limited availability signals higher worth, leading individuals to overvalue things that are harder to obtain as exemplified in behavioral economics. [54]
Research from a wide range of disciplines including psychology, [9] cognitive science, [10] neuroscience, [11] and economics, [12] suggest that humans have limited cognitive resources that can be used at any given time, when resources are allocated to one task, the resources available for other tasks will be limited. Given that attention is a ...
The term cognitive miser was first introduced by Susan Fiske and Shelley Taylor in 1984. It is an important concept in social cognition theory and has been influential in other social sciences such as economics and political science. [2] People are limited in their capacity to process information, so they take shortcuts whenever they can. [2]