Behavioral and Neoclassical Economics

A collection of flashcards to help review key concepts in behavioral and neoclassical economics.

Neoclassical economists

Economists who believe that individuals aim to make rational decisions and adjust to mistakes.

Cognitive biases

Systematic patterns of deviation from norm or rationality in judgment, categorized into unevolved capacity for solving modern problems and faulty heuristics.

Prospect theory

A behavioral economic theory that describes how people deal with gains and losses.

Availability heuristic

A mental shortcut that relies on immediate examples that come to mind when evaluating a specific topic, concept, method, or decision.

Time inconsistency

The tendency to misjudge future actions and outcomes, leading to decisions that conflict with one's long-term goals.

Precommitment strategies

Techniques to deal with time inconsistency problems, such as automatic payroll deductions.

Myopia (in economics)

The difficulty individuals have in conceptualizing the future, leading to a focus on immediate concerns over long-term planning.

Fairness in economics

The consideration that individuals may sacrifice their own well-being to treat others fairly, contrary to solely self-interested behavior.

Framing effects

The way information is presented that can influence people's decisions and perceptions.

Behavioral economists

Economists who study the effects of psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions.