Behavioral Economics and Consumer Choices: An Exploration of Human Decision-Making

Standard economics assumes that we are rational . . . But, we are far less rational in our decision making . . . Our irrational behaviors are neither random nor senseless- they are systematic and predictable. We all make the same types of mistakes over and over, because of the basic wiring of our brains. ― Dan Ariely, Predictably Irrational: The Hidden Forces That Shape Our Decisions

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Introduction to Behavioral Economics

Behavioral economics represents a burgeoning discipline that integrates insights from psychology and economics to elucidate how individuals make choices that deviate from traditional economic theories, which often assume that humans are rational actors making utility‑maximizing decisions based on complete information. Instead, behavioral economics posits that various cognitive biases, emotional influences, and social factors play significant roles in shaping consumer behavior, thus providing a more nuanced understanding of the decision‑making processes that underlie purchasing behaviors in real‑world contexts. As scholars have increasingly recognized the limitations of classical economic models in predicting actual consumer actions, behavioral economics has gained traction for elucidating the complexities of human behavior, leading to meaningful implications in…