What is Behavioural Economics?
Behavioural Economics (BE) as the study of cognitive, social, and emotional influences on people's observable economic behavior. BE research uses psychological experimentation to develop theories about human decision making and has identified a range of biases.
Whereas a person might be expected to weigh the benefits and drawbacks and then choose the best possible option, behavioral economics demonstrates that people rarely behave in this manner. Individuals are often influenced by emotion or innate bias (such as future discounting) to make choices that are not in their best interests in the long run
Behavioural Economics combines ideas from the fields of Psychology and Economics. Probably, other Sciences play an important role such as Sociology, Anthropology and Neuroscience.
Finally, Behavioural Economics suggests ways in which experts could restructure the environment to make it easier for people to make better choices (Sunstein, 2014).
In short, the main message of Behavioural Economics is that people very often make mistakes of judgment and need a nudge to make decisions that are in their own interest. Understanding what goes wrong can help people make better and more rational choices.
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