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Which of the following statements best reflects how a behavioral economist views individual decision making?
A) Alex makes wrong decisions sometimes,but usually it is only when he has been given bad information.
B) Kara carefully calculates and weighs the expected benefits and costs of every option before making a decision.
C) Alicia may appear to care about others,but even her seemingly altruistic behaviors are really about furthering her own interests.
D) Balin tries to make good,well-thought-out decisions,but his desire for utility in the present means that he often gives in to costly temptations.
Utility
The want-satisfying power of a good or service; the satisfaction or pleasure a consumer obtains from the consumption of a good or service (or from the consumption of a collection of goods and services).
Costly Temptations
Unnecessary expenses or indulgences that can detract from long-term financial goals and stability.
Altruistic Behaviors
Acts motivated by the intention to help or benefit another individual or group of individuals without expectation of benefit for oneself.
- Identify factors that impact individual and market behaviors from a behavioral economics perspective.
- Understand how behavioral economics explains suboptimal decisions and systematic errors.
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Learning Objectives
- Identify factors that impact individual and market behaviors from a behavioral economics perspective.
- Understand how behavioral economics explains suboptimal decisions and systematic errors.
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