Behavioral Economics Flashcard

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Anchoring Bias

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A cognitive bias where individuals place undue emphasis on the first piece of information.

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What does Behavioral Economics study?

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How psychological and cognitive factors influence economic decisions.

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Cognitive Bias

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A systematic deviation from rational thinking.

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What does Economics study?

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The production, distribution, and consumption of goods and services.

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Endowment Effect

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A cognitive bias where people ascribe more value to things they own.

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Herd Mentality

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A cognitive bias where individuals mimic the actions of a group.

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Heuristics

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Mental shortcuts that simplify decision-making processes.

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Loss Aversion

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A cognitive bias where the discomfort of losing value is greater than the pleasure of gaining value.

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Mental Accounting

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A cognitive bias where individuals categorize and treat money differently.

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What is Personal Finance?

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The management of an individual's financial decisions.