http://www.research-live.com/magazine/how-will-behavioural-economics-change-research?%2F4004762.article
Definition:
"Behavioural economics is a reaction to traditional economic theory, which has tended to assume that decision-making is based on individuals acting rationally. Behavioural economics shoots holes in this by demonstrating how our behaviour is, to a large extent, unconscious, irrational and socially driven....We may be dealing with behaviour that’s irrational, but that doesn’t mean it isn’t predictable."
Behavioral Economics 101
We use rules of thumb to cut through complexity
It would be impossible to make considered, rational choices for more than a handful of items when doing a weekly shop at a supermarket. To make sense of the sheer amount of information, we unconsciously adopt coping strategies, or heuristics.
We are hard-wired to think relatively
We focus on the relative advantage of one thing over another, rather than its absolute value.
We are heavily influenced by other people
We tend to observe and copy what others do and, generally, we like conforming. And even when we think we are being individual, our choices are still influenced by aspirational people, experts or people we want to impress. Standing out from the crowd isn’t the same as not being influenced by it.
We think short term and we are loss-averse
The ‘buy now, pay later’ bias can affect everything from our choice of sofas to our pension planning and long-term health.
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