- Explain the concept in your own words and write a detailed and thoughtful reflection on what you have learned
- How can businesses or governments use behavior economics?
- Include ONE image related to Behavior Economics and link to at least one article or video that discusses behavior economics.
- Write a few sentences as to what the article or video demonstrates. Do not use the same video or article that we watched in class.
- Behavioral Economics is a method of economic analysis that applies psychological insights into human behavior to explain economic decision-making. It helps to understand a person when and how they make errors. It provides some valuable insights that individuals are not behaving in their own best interests. People tend to choose the option that has the greatest immediate appeal at the cost of long-term happiness such as drugs and overeating. They often don’t think how these things can effect them in future.
- These days, a growing number of businesses are applying behavioural economics to better understand and influence the way people make personal decisions.
Unlike traditional economics, which assumes that people make decisions with the logic and rationality, behavioral economics combines psychology and economics to show how people make decisions in real life. When faced with complex financial choices, people get swept away by emotion, they rely on intuition and hunches, and they take mental shortcuts that lead them astray.
https://www.thoughtco.com/intro-to-behavioral-economics-1146878
The article talks about how Behavioral Economics Differs From Traditional Economic Theory. Behavioral Economics aim to develop models which account for the facts that people procrastinate, are impatient, aren’t always good decision-makers when decisions are hard (and sometimes even avoid making decisions altogether), go out of their way to avoid what feels like a loss, care about things like fairness in addition to economic gain, are subject to psychological biases which make them interpret information in biased ways, and so on.
Economics 12 