1.2.10 Alternative View Of Behaviour

Question 1

Behavioural economics

Answer 1

Disputes rationality and utility maximisation arguing that emotional, social and psychological factors can influence decision making.

Question 2

Nudge theory

Answer 2

Small interventions made to encourage individuals to make different decisions e.g. displaying healthier food more obviously in school canteens or opt-out of donating organs rather than opt-in (Theresa May).

Question 3

Bounded reality

Answer 3

The idea that economic agents do the best with the available information.

Question 4

Heuristics

Answer 4

Rule of thumb/ mental shortcuts whereby consumers follow the simplest way to make satisficing decisions (aim for satisfactory rather than optimal results).

Question 5

Asymmetric information

Answer 5

Information is not shared equally between two partners.