February 2016
Beginner to intermediate
500 pages
33h 40m
English
So far, we have assumed that consumers are rational, maximizing individuals. A new field of study, behavioral economics, adds insights from psychology and empirical research on human cognitive and emotional biases to the rational economic model to better predict economic decision making.8 We discuss three applications of behavioral economics in this section: tests of transitivity, the endowment effect, and salience. Later in this book, we examine the psychology of decision making in networks (Chapter 9), strategic interactions (Chapter 13), and under uncertainty (Chapter 14).