Behavioral Economics: Psychology and Economic Decisions

Traditional economic models rely on the assumption of perfectly rational actors, yet everyday experience shows that human decisions are often systematically biased. Behavioral economics bridges the gap between theory and reality by analyzing the psychological factors behind economic choices. This course provides a foundational understanding of behavioral economics, equipping you to identify common cognitive biases, analyze deviations from rationality, and apply these insights across diverse fields like finance, public policy design, and market strategy. What you'll learn: * Understand the core principles of behavioral economics and its historical context. * Analyze key cognitive biases, such as loss aversion, framing, and present bias, that influence individual decisions. * Learn how concepts like bounded rationality and prospect theory challenge traditional utility maximization models. * Practice identifying common mental shortcuts (heuristics) and how they lead to predictable, systematic errors in judgment. * Apply the concepts of Nudge Theory and default options to design effective public and private sector policies. The course begins with defining the field and its core terminology before exploring the major psychological concepts that underpin economic decisions. We then move into practical applications, showing how these insights inform real-world outcomes in various economic sectors. This course is designed for absolute beginners interested in economics, psychology, or decision science. No prior knowledge of advanced economic theory or statistics is required. Start reading today to unlock a deeper understanding of human behavior in the marketplace.