Behavioural economics Flashcards
What is bounded rationality ?
recognises decisions based on incomplete information
What is bounded self control ?
involves struggles with impulses and aligning choices with long-term goals
What is an example of bounded rationality ?
A person, facing time constraints, may choose unhealthy fast food over a healthy lunch
What is Rule of thumb/heuristics?
refers to the use of simplified mental shortcuts or practical guidelines to make judgments quickly
What is an example of rule of thumb?
a person choosing a restaurant based on online reviews rather than detailed research
What is anchoring ?
when individuals rely too heavily on the first piece of information encountered
What is availability bias ?
involves giving disproportionate weight to readily available information
What is social norms/ herding ?
tendency of individuals to conform to the behaviours, opinions, or actions of others in a social group.
