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.

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