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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 ...
Predictably Irrational: The Hidden Forces That Shape Our Decisions is a 2008 book by Dan Ariely, in which he challenges readers' assumptions about making decisions based on rational thought. Ariely explains, "My goal, by the end of this book, is to help you fundamentally rethink what makes you and the people around you tick.
the marginal cost to an individual of holding an erroneous (or irrational) belief is low. In the framework of neoclassical economics, Caplan posits that there is a demand for irrationality. A person's demand curve describes the amount of irrationality that the person is willing to tolerate at any given cost of irrationality.
Attribution (psychology) – Process by which individuals explain causes of behavior and events; Black swan theory – Theory of response to surprise events; Chronostasis – Distortion in the perception of time; Cognitive distortion – Exaggerated or irrational thought pattern; Defence mechanism – Unconscious psychological mechanism
[1] [2] The concept of irrationality is especially important in Albert Ellis's rational emotive behavior therapy, where it is characterized specifically as the tendency and leaning that humans have to act, emote and think in ways that are inflexible, unrealistic, absolutist and most importantly self-defeating and socially defeating and destructive.
The Logic of Life: The Rational Economics of an Irrational World is a book by Tim Harford published in 2008 by Random House. [1] Harford argues that rational behavior is more widespread than expected in the larger population. He uses economic principles to draw forth the rational elements of supposedly illogical behaviors to illustrate his point.
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 behavioral finance. Users in behavioral and experimental economics studies decided to cease participation in iterative money-making games when the threat of loss ...
Rational choice modeling refers to the use of decision theory (the theory of rational choice) as a set of guidelines to help understand economic and social behavior. [1] [2] The theory tries to approximate, predict, or mathematically model human behavior by analyzing the behavior of a rational actor facing the same costs and benefits.