Chapter 15

Question 1

What’s neoclassical economics?

Answer 1

Consumers are rational and act to maximise there welfare.

Question 2

What is homo-economics?

Answer 2

Economics agents are not rational and their choices can be manipulated by things such as:
habits/ addictions (rules of thumb instead of fully thinking through a decision)#

peer pressure (acting according to social norms)

weakness in computation ( may have too much or too little decision to ake the most rational decision)