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Behavioral Economics

Definition

Everyday life is full of decisions and choices. Economic decisions are especially important to our lives whether we are deciding what to buy for lunch, shopping around for the best price on books, thinking about saving for vacation, or negotiating for a better salary. An important question for many researchers is how people make economic decisions. Specifically, researchers are interested in the assumptions, beliefs, habits, and tactics that people use to make everyday decisions about their money, work, savings, and consumption. Behavioral economics is a field of study that combines the techniques, methods, and theories of psychology and economics to research, learn about, and explain the economic behavior of real people. Whereas neoclassical economics has traditionally looked at how people should behave, behavioral economics tries ...

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