Heuristics are simple, efficient rules, strategies, or guidelines used to make decisions or judgments quickly. They are mental shortcuts that help us navigate complex situations and solve problems without extensive analysis. Key Characteristics / Core Concepts Rule of Thumb: Heuristics are practical, experience-based rules, not always guaranteed to be optimal. Mental Shortcut: They simplify decision-making … Read more
Behavioral economics studies how psychology affects economic decision-making. It examines how cognitive biases, emotions, and social factors influence choices, departing from the traditional assumption of perfectly rational actors. Key Characteristics / Core Concepts Cognitive biases: Systematic errors in thinking that affect decisions (e.g., confirmation bias, anchoring bias). Heuristics: Mental shortcuts used to simplify decision-making, often … Read more