Quick and Simple Heuristics and Real-World Decision Making
In This Chapter
Looking at what conventional economics says about decision making
Delving into bounded rationality and satisficing
Understanding unconventional human behavior
Looking at loss aversion and the pain of loss
Thinking about errors and biases in decision making
Introducing fast and frugal heuristics
The populist perspective on behavioral economics — what makes it so sexy to many people — is that behavioral economists say that people are irrational and even just plain dumb. Although this interpretation of one important perspective in behavioral economics is a bit extreme, it does hit home.
This chapter examines this mainstream “errors and biases” perspective of behavioral economics, a view that holds that people tend to make decisions that are persistently error prone and biased. According to both conventional ...