Chapter 2- Behavioral Economics

Social factors influencing demand

Social awareness

Social norms

Social pressures

What do humans do when making an economic decision

Cost-benefit analysis

Bounded rationality

When consumers do not have sufficient information

Habitual behaviour

Carry on behaving the same as it became a habit

Heuristics

Rules of thumb causing people too not maximise behaviour

Choice architecture

How decisions are affected by the layout, sequencing or range of choices available

Herd behaviour

Choices influenced by people who are around

Anchoring

Giving the first piece of information too much weight and then anchor new information from this

Priming

Providing signals to make us subconsciously make a decision

Framing

Framing a question in a different way

Asymmetric framing

Including an obviously expensive choice to guide consumers to more expensively priced items

Availability bias

When people judge the likelihood of an event by the ease of the examples that come to mind

Commitment

The more public the decision, the more likely people are to commit to it