Behavioral Economics is a field of study that combines insights from psychology and economics to understand how individuals make decisions. It challenges the traditional economic theory that assumes people are fully rational actors who make choices solely based on logic and self-interest. Instead, behavioral economics explores how cognitive biases, emotions, social influences, and other psychological factors affect decision-making processes. It examines phenomena such as heuristics, framing effects, and loss aversion, showing that people often make irrational choices that deviate from expected utility theory. This discipline seeks to understand how these behaviors can influence market outcomes, public policy, and personal finance. By integrating psychological insights into economic analysis, behavioral economics provides a more nuanced view of human behavior in economic contexts.
Daniel Kahneman, a seminal figure in behavioral economics, passed away on March 27, 2023, at age 90 in Switzerland, choosing assisted dying. Kahneman's influential work, including Thinking, Fast and Slow,…