Elements of Behavioral Economics
- Bounded Rationality: limited cognitive resources leads to imperfect rational decisions and may rely on heuristics with limited access to information at the time
- limited cognitive capacity
- incomplete information
- time constraints
- Cognitive Biases: Errors in judgement influence decision-making like loss aversion, framing effect, anchoring bias
- Prospect Theory: Values vary in gains and losses, people are more risk-averse when facing losses, decisions vary on risk, uncertainty, and probability
- loss aversion
- value function
- probability weighting
- reference point
- Social Influences: choices are influenced by social norms and peer pressure
- Choice Architecture: presentation of choices influences decision-making
- power of presentation
- nudging behavior
- defaults
- framing
- incentives
- simplification
- References:
- Thinking, Fast and Slow
- Nudge: Improving Decisions About Health, Wealth, and Happiness
- Predictably Irrational: The Hidden Forces That Shape Our Decisions
- Influence: The Psychology of Persuasion
- Misbehaving: The Making of Behavioral Economics
- The Undoing Project: A Friendship That Changed Our Minds
- Scarcity: Why Having Too Little Means So Much
- The Winner's Curse: Paradoxes and Anomalies of Economic Life
- Behavioral Economics
- Advances in Behavioral Economics
- behavioraleconomics.com
- behavioral scientist
- The Behavioral Scientist
- Journal of Economic Behavior & Organization
- American Economic Review
- MIT Courseware - Psychology and Economics
