Behavioral economics challenges traditional economic theories from "summary" of Misbehaving by Richard H Thaler
Traditional economic theories assume that people are rational decision-makers who always act in their best self-interest. However, behavioral economics challenges this assumption by recognizing that humans are not always rational. In fact, we are often influenced by various biases and emotions that can lead us to make decisions that defy traditional economic models. One of the key insights of behavioral economics is that people do not always make decisions that maximize their utility. Instead, we are prone to making irrational choices due to cognitive biases such as loss aversion and overconfidence. These biases can cause us to deviate from the predictions of traditional economic theories, leading to suboptimal outcomes. Furthermore, b...
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