Understanding Bounded Rationality and Cognitive Biases in Behavioral Economics

The video explores behavioral economics, focusing on why human decision-making is often imperfect. It introduces the concept of homo economicus and contrasts it with real human behavior, highlighting bounded rationality and self-control. The video delves into cognitive biases, such as the gambler's fallacy and hot hand fallacy, and explains rules of thumb, anchoring, availability bias, and social norms. These concepts illustrate how humans deviate from perfect rationality in decision-making.

What is the main focus of behavioural economics?

Explain the concept of bounded rationality.

What are the three reasons why human decision-making is often imperfect?

Describe the theory of bounded self-control.

What is a cognitive bias and how does it affect decision-making?

Provide an example of the gambler's fallacy.

What is the hot hand fallacy in sports?

What role does anchoring play in decision-making?

Discuss the implications of the availability bias.

How do social norms influence human behavior?