ECONOMICS
MONEY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Behavioral economics analyzes psychological insights such as emotional and social factors that impact economic decisions.
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Behavioral economics is the study of individual money management techniques to reach long-term financial goals.
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Behavioral economics analyzes the supply and demand curve of consumer purchases.
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Behavioral economics is the study of regional, national, and global economic policies.
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Detailed explanation-1: -Behavioral economics combines elements of economics and psychology to understand how and why people behave the way they do in the real world. It differs from neoclassical economics, which assumes that most people have well-defined preferences and make well-informed, self-interested decisions based on those preferences.
Detailed explanation-2: -Heuristics. Heuristics is a complicated field, but it simply means that humans tend to make decisions using mental shortcuts as opposed to using long, rational, optimal reasoning. Most often, people latch onto something is true that may no longer be the case.
Detailed explanation-3: -Nudge theory is a concept in behavioral economics, decision making, behavioral policy, social psychology, consumer behavior, and related behavioral sciences that proposes adaptive designs of the decision environment (choice architecture) as ways to influence the behavior and decision-making of groups or individuals.
Detailed explanation-4: -The field of behavioral economics studies and describes economic decision-making. According to its theories, actual human behavior is less rational, stable, and selfish than traditional normative theory suggests (see also homo economicus), due to bounded rationality, limited self-control, and social preferences.
Detailed explanation-5: -Although this field of research is extremely extensive, we can summarize three key insights from behavioral economics that apply to most economic models: (1) People aren’t always rational, (2) People care about fairness, and (3) People are inconsistent over time.