Behavioral economics recognizes that people frequently make errors, but these errors generally cancel out in such a way that neoclassical models are sufficient for predicting economic outcomes.

Neoclassical Models

Economic theories and models that focus on the determination of prices, outputs, and income distributions in markets through supply and demand, often under the assumption of rational behavior and efficient markets.

Economic Outcomes

The results or consequences of economic activities, including growth, employment levels, and wealth distribution.