Behavioral Economics


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Behavioral Economics

A theory of economics that attempts to explain economic participants' decisions as those of rational actors looking out for their self-interest given the sometimes inefficient nature of the market. Tracing its origins to Adam Smith's The Theory of Moral Sentiments, one of behavioral economics' primary observations holds that investors and people in genera make decisions on imprecise impressions and beliefs rather than rational analysis. A second observation states that the way a question or problem is framed to an investor will influence the decision he/she ultimately makes. These two observations largely explain market inefficiencies; that is, behavioral economics holds that markets are sometimes inefficient because people are not mathematical equations. Behavioral economics stands in stark contrast to the efficient markets theory. See also: Naive diversification, Formula plan, Subjective probabilities.
References in periodicals archive ?
The convergence of advanced analytics, evidence-based budgeting, and behavioral economics has the opportunity to transform not only how programs are evaluated and decisions are made, but also how program design can be improved to create greater public value.
Since its inception, consumer behavior analysis has been understood as the application of behavioral economics to consumer behavior in marketing-oriented economies (Foxall, 2001, 2002).
The technologies are coupled with deep knowledge of behavioral economics, the essence of emotional branding, and quantitative models of the drivers of human behavior to provide deep insight and actionable results for our clients.
Misbehaving: The Making of Behavioral Economics comes from "the founding father of behavioral economics" who considers how economic theory relates to social lives, improvements, and change, and is a recommended pick for general-interest, psychology and social issues readers alike.
The Behavioral Economics Working Group held a meeting on Behavioral Finance at the University of Chicago on April 11.
It contains valuable lessons for managers, its audio format lends to quick listens by busy individuals, and it relies on behavioral economics to address psychology and its applications in business management processes.
A related concept from behavioral economics is in the priming effect heuristic where words have been shown to influence future performance on a particular task.
The webinar will highlight more refined uses of technology to improve behavioral economics and create long-term engagement, behavior change and lasting changes in health outcomes.
The rule applies behavioral economics to worker safety, Dr.
This Article contends that, whatever its virtues for the larger field of law and economics, behavioral economics can play no useful role in contemporary antitrust policy.
The study, led by Colin Camerer, Robert Kirby Professor of Behavioral Economics, has found that in a simple game of hide-and-seek that researchers call the Inspection Game, performance of the chimps was far more impressive: they learned the game rapidly and nearly attained the predictions of the Nash theorem for optimal play, while humans they played reasonably well, slowly learning to predict opponent choices, but they did not play optimally.
This illogical conclusion is heavily grounded in a field of study known as behavioral economics.

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