Individual Economic Decision Making Flashcards
Altruism
This is the behaviour that goes against traditional economists, where individuals act rationally for a selfless concern for others welfare
Anchoring
When individuals rely on the first information they were given
Asymmetric information
This is when one party during an economic transaction has more information than the other
Imperfect Information
This is when an individual does not possess full information so can make irrational economic decisions
Availability Bias
When individuals base the likeliness of future events on past ones
Behavioural Economics
This is the study of psychology to explain why individuals make irrational decision
Traditional Economics
This is the theory that individuals always act rationally and in their self interest
Bounded Rationality (with 3 causes)
This is the inability for individuals to make rational economic decisions due to imperfect information, time constraints and limited mental processing ability
Bounded Self Control
This is the inability for individuals to make rational economic decisions due to the inability to control themselves
Choice Architecture
This is the framework of presenting choices in different ways
Nudges
Subtle way of encouraging individuals towards desired choices, normally towards social norms
Framing
Presentation of information to impact an individuals behaviour
Social Norms
This is the socially accepted behaviours by a group
Default Choice
The pre-selected option that individuals will choose unless they have opted out
Restricted Choice
The limiting of choices to simplify decision-making and eliminate undesirable choices
Mandated Choice
The enforcing of a choice for the good of the public
