Behavioral Economics Concepts

Herd Mentality

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

• The ability to think independently and critically.

• A psychological condition where individuals act against their own interests.

• A social phenomenon where individuals avoid group influence.

Overestimation

• A belief that one is worse at something than they actually are.

• A belief that one is better at something than they actually are.

• An accurate assessment of one's abilities.

• A complete lack of self-awareness.

Endowment Effect

• The tendency to put more value on things you already own.

• The tendency to undervalue things you do not own.

• The tendency to overvalue future gains.

• The tendency to prefer immediate rewards over future rewards.

Cognitive Bias

• A subconscious error in thinking that leads to irrational decision making.

• A conscious choice made after careful consideration.

• A logical reasoning process that ensures accurate conclusions.

• A method of decision making based on statistical analysis.

Social Media Marketing

• The use of social media platforms and websites to promote a product or service.

• A method of advertising through traditional media channels.

• The process of creating and distributing printed materials for marketing.

• A strategy focused solely on email marketing.

Overprecision

• A state of uncertainty about an answer.

• An exaggerated certainty that an answer is correct.

• A method of estimating probabilities.

• A tendency to underestimate risks.

Behavioral Economics

• The study of how economic factors influence human behavior.

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

• A branch of economics that focuses solely on market trends.

• The analysis of financial markets using statistical methods.

Overplacement

• A belief that one is worse than others.

• A belief that one is equal to others.

• A belief that one is better than others.

• A belief that one is the best in every aspect.

Confirmation Bias

• The tendency to seek out information that contradicts our beliefs.

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

• The tendency to make decisions based on emotions rather than facts.

• The tendency to rely on first impressions when forming opinions.

Loss Aversion

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

• The belief that gains are more significant than losses.

• The idea that people are indifferent to both gains and losses.

• The tendency to avoid making decisions that could lead to losses.