behavioral economics

Examples of behavioral economics in the following topics:

• Behavioral Economics: Irrational Actions

  • Behavioral economics focuses on the bounds of rationality of economic agents.
  • Behavioral economics has specific characteristics based on what is studied.
  • There are many aspects in behavioral economics, and three of the most prevalent are:
  • Behavioral economics focuses on the study of how and why individuals and institutions make economic decisions .
  • Behavioral economics was born out of the combination of economics and psychology.

• Introduction to the Rules of the Game

  • Whether a society emphasizes the use of exchange, reciprocity or eminent domain to allocate resources, "Any economic system requires a set of rules, an ideology to justify them, and a conscience in the individual which makes him strive to carry them out" (Robinson, p 13).
  • The structure of the rules of the games shapes the society's economic system.
  • Neoclassical microeconomics does not often explicitly consider the nature of these rules and their relation to economic behavior.

• Normative and Positive Economics

  • Positive economics is defined as the "what is" of economics, while normative economics focuses on the "what ought to be".
  • It focuses primarily on facts and cause-and-effect behavioral relationships, including developing and testing economic theories.
  • As a science, positive economics focuses on analyzing economic behavior.
  • Normative economics is a branch of economics that expresses value or normative judgments about economic fairness.
  • Positive economics does impact normative economics because it ranks economic policies or outcomes based on acceptability (normative economics).

• Defining Macroeconomics

  • Macroeconomics is a branch of economics that focuses on the behavior and decision-making of an economy as a whole.
  • Economics is comprised of many specializations; however, the two broad sub-groupings for economics are microeconomics and macroeconomics.
  • Macroeconomics is a branch of economics that focuses on the behavior and decision-making of an economy as a whole .
  • These variables taken as a whole comprise a grouping of variables that are referred to as economic indicators.
  • As a result, macroeconomics tends to be widely cited in discussions related to government intervention in economic expansion and contraction, as well as, with respect to the evaluation of economic policy.

• Allocation, Provisioning and the Economic System

  • Economics as a study of the allocation problem is straightforward.
  • Given a set of resources, a state of technology, a group of individuals who have a set of preferences and a set of social (including economic) institutions, what is the optimal allocation of those resources.
  • Economics as a study of provisioning is the study of how individuals and societies evolve over time.
  • Knowledge, beliefs, values, principles, social institutions and economic behavior change.
  • The concern of provisioning is with the economic actors (agents), the context in which their choices are made and the criteria used to make and evaluate those choices.

• Is Economics a Science?

  • Market interaction between buyers and sellers is an evaluation of social behavior in an activity where each agent is seeking to maximize return and minimize cost.
  • Microeconomics examines the behavior individual consumers and firms within the market, including assessment of the role of preferences and constraints.
  • Formal economic modeling began in the 19th century with the use of differential calculus to represent and explain economic behavior, such as utility maximization, an early economic application of mathematical optimization in microeconomics.
  • Economics utilizes mathematics to assess the relationships between economic actors in environments in which resources are finite.
  • The use of mathematics in economics increased the quantitative analysis inherent in the discipline; however, given the discipline's essentially social science roots, many economists from John Maynard Keynes to Robert Heilbroner and others criticized the broad use of mathematical models for human behavior, arguing that some human choices can not be modeled or evaluated in a mathematical equation.

• Introduction to Pure Competition

  • It is generally believed that market structure influences the behavior and performance of agents with in the market.

• Introduction to Optimization and Markets

  • Economics can be viewed as a social science or as a tool for decision science.
  • As a tool economics provides some insights that help identify optimal choices with respect to specific alternatives.
  • One of the basic precepts of Neoclassical microeconomics is that voluntary markets for goods with nonattenuated property rights will provide the information and incentives that coordinate individual behavior to achieve the maximum utility for society.
  • Most of Neoclassical economics presumes that the agent is trying to maximize or minimize (optimize) some objective with respect to a set of constraints.

• The Magic of the Economy

  • Economics is a social science.
  • This means that economics has two important attributes.
  • The complexity of the dynamics of human motivation and systems has led to the establishment of assumptions that form the basis of the theory of consumer and firm behavior, both of which are used to model circular flow interactions within the economy .
  • Economics provides distilled frameworks to analyze complex societal interactions, as in the case of consumer and firm behavior.
  • For example, the circular flow diagram displays the economic framework related to the dynamic interconnectedness of economic agents.

• Introduction to Demand and Consumer Behavior

  • Demand is a model of consumer behavior.