Behavioral Economics Review

Scarcity

• a belief or idea you consider important or desirable.

• An amount of money that you receive unexpectedly

• deals with how people satisfy unlimited wants and needs with limited resources

• what you have to give up to buy what you want in terms of other goods or services

cognitive bias

• what you have to give up to buy what you want in terms of other goods or services

• a belief or idea you consider important or desirable.

• An amount of money that you receive unexpectedly

• a systematic error in thinking that occurs when people are processing and interpreting information in the world around them and affects the decisions and judgments that they make

Overconfidence Bias

• the tendency people have to be more confident in their own abilities

• we emphasize losses more than gains/ try to avoid losses

• a person has already invested in this course of action and does not recognize what they invested initially is sunk (or gone)

• our brains persistently seek out newer and more rewarding experiences and constantly compare ourselves to others

Loss Aversion

• the tendency people have to be more confident in their own abilities

• we emphasize losses more than gains/ try to avoid losses

• a person has already invested in this course of action and does not recognize what they invested initially is sunk (or gone)

• our brains persistently seek out newer and more rewarding experiences and constantly compare ourselves to others

Hedonic Adaptation

• the tendency people have to be more confident in their own abilities

• we emphasize losses more than gains/ try to avoid losses

• a person has already invested in this course of action and does not recognize what they invested initially is sunk (or gone)

• our brains persistently seek out newer and more rewarding experiences and constantly compare ourselves to others

FOMO (fear of missing out)

• the tendency people have to be more confident in their own abilities

• refers to the feeling or perception that others are having more fun, living better lives, or experiencing better things than you are

• a person has already invested in this course of action and does not recognize what they invested initially is sunk (or gone)

• our brains persistently seek out newer and more rewarding experiences and constantly compare ourselves to others

Confirmation Bias

• the tendency people have to be more confident in their own abilities

• refers to the feeling or perception that others are having more fun, living better lives, or experiencing better things than you are

• tendency to look for information that confirms what you already know

• our brains persistently seek out newer and more rewarding experiences and constantly compare ourselves to others

Herd Mentality

• The tendency to choose an option that the majority chooses

• refers to the feeling or perception that others are having more fun, living better lives, or experiencing better things than you are

• tendency to look for information that confirms what you already know

• our brains persistently seek out newer and more rewarding experiences and constantly compare ourselves to others

windfall

• we emphasize losses more than gains/ try to avoid losses

• An amount of money that you receive unexpectedly

• the tendency people have to be more confident in their own abilities

• a belief or idea you consider important or desirable.

Opportunity Costs

• what you have to give up to buy what you want in terms of other goods or services

• refers to the feeling or perception that others are having more fun, living better lives, or experiencing better things than you are

• people tend to value items that they own more highly than they would if they did not belong to them

• An amount of money that you receive unexpectedly