Behavioural Economics Flashcards
What is bounded rationality?
Bounded rationality refers to our limited mental processing when making a decision.
What is bounded self-control?
Bounded self-control refers to our limited ability to control ourselves when making a decision.
What is altruism?
Altruism is when we care about the utility of other people.
What is herd behaviour?
Herd behaviour refers to people making decisions that are strongly influenced by social norms.
What is anchoring bias?
Anchoring bias is when consumers make decisions influenced by the 1st piece of information they see.
What is avaliablity bias?
Availability bias is when consumers make decisions influenced by the most recent piece of information they have seen.
What are rules of thumb?
Rules for thumb are mental shortcuts consumers use to make decisions quickly.
What is choice architecture?
It describes the layout of our available choices
What is nudging?
Nudging is a change in choice architecture that tries to influence people’s behaviour without restricting their choices.
What is framing?
Framing is the way a choice is presented to you.
What are the 3 types of choices?
-Default
-Restricted
-Mandated
What are default choices?
Default choices are when someone is automatically enrolled in a certain choice.
What are restricted choices?
Restricted choices are when consumers are still able to choose between options, but the difficulty of choosing some options is much higher than the others.
What are mandated choices?
Mandated choices are when people are legally required to make a choice.
What are the 10 main topics in behavioural economics?
Bounded rationality
Bounded self-control
Altruism
Herd behaviour
Anchoring bias
Availability bias
Rules of thumb
Choice architecture
Nudging
Framing
