Neoclassical V Behavioral Economics Flashcards
1
Q
Behavioural Economics
A
A recent phenomenon, deals with human behaviour’s deviations from the ‘rational’ man
2
Q
What are the assumptions of Rationality? (4)
A
Agents choose independently
An agent has fixed tastes and preferences
Agents gather complete information on alternative choices
Agents always make optimal choice given his/her preferences
3
Q
Assumptions of Behavioural Economics (6)
A
Agents reason poorly, act intuitively and have limited computational capacity
They are strongly influenced by social norms
They act reciprocally by making kind gestures
Lack self-control, tend to be present-biased
Strongly attached to existing default choices
Loss adverse
