Which of the following best explains the difference between neoclassical economics and behavioral economics?

A) Neoclassical economics believes that government should play a minimal role in the economy, while behavioral economics calls for a more active role for government.
B) Neoclassical economics assumes that people are rational in their decision making, while behavioral economics believes people make systematic errors.
C) There is no real difference; behavioral economics just studies more intently how the rational decision-making process works.
D) Neoclassical economics no longer offers valid explanations for economic outcomes, while behavioral economics does.

Question

Ahmad Abboud · Accepted Answer

Final Answer : B, Explanation :  Neoclassical economics is based on the assumption that individuals make rational decisions to maximize their utility, while behavioral economics incorporates psychological insights into economic models, recognizing that people often make decisions that deviate from those predicted by traditional rational models, due to biases and heuristics.

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