ECO 412 Behavioral Economics
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This ECO 412 Behavioral Economics course challenges basic assumptions about rationality in human decision-making. He examines the different ways in which real-world decision-makers deviate from rational decision-making, investigates the root causes of irrational decision-making, identifies the impact of the irrational, and suggests strategies for improving decision-making.
Behavioural economics combines elements of economics and psychology to understand how and why people behave in the real world. It differs from neoclassical economics, which assumes that most people have clear preferences and make wise, self-serving decisions based on those preferences.
In an ideal world, people will always make the right decisions to bring them the most benefit and satisfaction. In economics, the rational choice theory argues that when people are faced with different options in a limited environment, they choose the option that maximizes personal satisfaction. The theory suggests that people can make rational decisions by effectively weighing the costs and benefits of each available option according to their preferences and constraints. The final decision made will be the best choice for the person. Alas, behavioural economics explains that people are irrational and cannot make the right decisions.
Behavioural economics uses psychology and economics to investigate why people sometimes make unreasonable decisions and why and how their behaviour does not match the predictions of economic models. Decisions such as how much to spend on a cup of coffee, whether to go to graduate school, whether to live a healthy lifestyle.
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