Unit 1: Behavioral Economics

The subfield of economics that applies psychological insights into human behavior and to explain economic decision making

• Behavioral Economics

• Hedonic Adaptation

• Overestimation

• Social Media Marketing

A subconscious error in thinking that leads to irrational decision making

• Cognitive Bias

• Sunk Costs

• Overnight Test

• Herd Mentality

The tendency to search for information that supports our preconceptions and to ignore or distort contradictory evidence

• Confirmation Bias

• Sunk Cost Fallacy

• Overplacement

• Loss Aversion

The tendency to put more value on things you already own

• Endowment Effect

• Behavioral Economics

• Overprecision

• Overconfidence Bias

The tendency to feel anxiety/fear that an exciting or interesting event may currently be happening elsewhere, often aroused by posts seen on a social media website

• FOMO (Fear of Missing Out)

• Cognitive Bias

• Social Media Marketing

• Overestimation

The tendency to return to a baseline level of happiness regardless of whether you go through a positive or negative experience or event

• Hedonic Adaptation

• Confirmation Bias

• Sunk Costs

• Overnight Test

The tendency to conform to the behaviors and beliefs of the people around you

• Herd Mentality

• Endowment Effect

• Sunk Cost Fallacy

• Overplacement

The tendency to regard losses as considerably more important than gains of comparable magnitude

• Loss Aversion

• FOMO (Fear of Missing Out)

• Behavioral Economics

• Overprecision

The tendency people have to be more confident in their own abilities

• Overconfidence Bias

• Hedonic Adaptation

• Cognitive Bias

• Social Media Marketing

When a person believes they are better at something than they actually are

• Overestimation

• Herd Mentality

• Confirmation Bias

• Sunk Costs