Asked by Wenlu Zhang on Jun 25, 2024
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Both neoclassical and behavioral economics believe that people are mostly rational in both their decision making and their actions.
Neoclassical Economics
The dominant and conventional branch of economic theory that attempts to predict human behavior by building economic models based on simplifying assumptions about people’s motives and capabilities. These include that people are fundamentally rational; motivated almost entirely by self-interest; good at math; and unaffected by heuristics, time inconsistency, and self-control problems.
Rational Decision
Made when an individual, with clear set objectives, uses logic and all available information to choose the best possible outcome from various alternatives.
- Seize the fundamental aspects of behavioral economics and their distinction from neoclassical economics.
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Learning Objectives
- Seize the fundamental aspects of behavioral economics and their distinction from neoclassical economics.
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