chapter 7 vocab Flashcards
a model that portrays the economy as a collection of profit-maximizing firms and utility-maximizing households interacting through perfectly competitive markets
neoclassical model
a subfield of microeconomics that uses insights from various social and biological sciences to explore how people make actual economic decisions
behavioral economics
placing undue importance on particular information because it is readily available or vivid
availability heuristic
changing the way a particular decision is presented to people in order to influence their behavior
framing
overreliance on a piece of information that may or may not be relevant as a reference point when making a decision
anchoring effect
and economic concept describing the relative weighting on present benefits or costs compared with future benefits or costs
time discount rate
actions focused on the well-being of others, without thought about oneself
altruism
the general well-being of society, including one’s own well-being
the common good
the interdisciplinary field that studies the role that our brains, physiology, and genetics play in how we make economic decisions
neuroeconomics
to choose an outcome that would be satisfactory and then seek an option that at least reaches that standard
satisfice
starting from the present level of well-being and continuously attempting to do better
meliorating
the hypothesis that people make choices among a somewhat arbitrary subset of all possible options due to limits on information, time, or cognitive abilities
bounded rationality
the tendency for most people to value losses more than equivalent magnitude gains, in terms of how much welfare changes
loss aversion
the policy approach advocated in the 2008 book Nudge, where people remain free to make their own choices but are nudged toward specific choices by the way decisions are designed
libertariam paternalism THE NUDGE
