Individual economic decision making Flashcards
Altruism
the selfless and disinterested concern towards the wellbeing of others
Anchoring bias
individuals tend to rely on the first piece of information they are given
asymmetric information
when one party (buyers/ sellers) has more information that the other in an economic transaction
availability bias
individuals base the likeliness of future events occurring on past events
bounded rationality
Making decisions with limited time, information, and cognitive capacity.
behavioural economics
Studying how psychological factors influence economic decisions and behaviors.
bounded self control
Having limited ability to consistently regulate impulses and make long-term decisions due to cognitive limitations and emotional factors.
choice architecture
a framework illustrating the effects of presenting choices in different ways
Economic man (homo economicus)
A framework structuring the mind and decision making of a perfectly economic and rational human being
heuristics
rules of thumb
hyperbolic discounting
Valuing immediate rewards more than future rewards as time passes.
perfect information
both buyers and sellers have full knowledge of goods and services in a market
risk aversion
individuals tend to value losses more than commensurate gains
symmetric information
where consumers and producers have sufficient information to make rational decisions
utility
satisfaction gained from the consumption of a good or service
