Behavioral Economics

Human Decision Making

Behavioral Economics merges economics with psychology to explain why people make decisions that don't maximize their rational self-interest.

Key figures: Daniel Kahneman, Amos Tversky, Richard Thaler.

Core insight: People don't behave like the "rational actors" assumed by classical economics. They're influenced by framing, loss aversion, present bias, and social context.

For UX: Pricing, feature presentation, and upgrade paths all benefit from behavioral economics principles.

Quiz

Pass: 3/3 correct

1. Loss aversion means that losses feel approximately how many times worse than equivalent gains?

2. Which concept explains why '90% fat-free' sounds better than '10% fat'?

3. The sunk cost fallacy causes people to:

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