behavioural economics key terms Flashcards
Bounded self-control
Individuals inability to make rational decisions due to The inability to control themselves
Rules of thumb
Thinking shortcuts or informed guesses that individuals use to make decisions in order to save time And effort
Anchoring
The tendency of individuals to rely on particular pieces of information were making choices between different goods and services
Availability bias
A cause when individuals make judgments about the likelihood of future events according to how easy it is to recall examples of similar events
Social norms
Forms or patterns of behaviour considered acceptable by society or group within that society
Altruism And fairness
Individuals are motivated to do the right thing even if it means paying more for a good or service as they are concerned for the welfare of others
Choice architecture
A framework setting out different ways in which choices can be presented to consumers and impact the presentation on consumer decision making
Framing
How something is presented influences the choices people make for example the way words and numbers are used
Nudges
Factors which encourage people to think and act in a particular way not just try to shift group And individual behaviour in ways which comply with desirable Social norms
Default choice
An option that is selected automatically in less an alternative is specified
Influencing consumer behaviour by setting socially desirable choices as default options
mandidated choice
Where people are legally required to make a decision
Restricted choice
Offering people a limited number of options so that they are not overwhelmed by the complexity of the situation. Too many choices people might make poorly thought out decisions or not make a decision
