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Flashcards in Behavioral economics. Deck (13)
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1
Q

What is bounded rationality?

A

Where the ability to act rationally is restricted by-the human mind, info available or time available.

2
Q

What is bounded self control?

A

When individuals have good intentions but the self control. E.g. not revising or going to the gym.

3
Q

What are rules of thumb?

A

Sometimes known as heuristics, they are shortcuts individuals use to make decisions. E.g. a customer may have the same drink every time they go to a coffee shop because they liked it on the previous visit.

4
Q

What is anchoring?

A

The tendency for individuals to rely on particular pieces of information when making decisions.

5
Q

What is availability bias?

A

It’s when people make judgments about the probability of events by recalling recent instances.

6
Q

What are social norms?

A

The influence of others when making decisions.

7
Q

What is altruism?

A

People are motivated to “do the right thing”. E.g. people will buy Fairtrade goods even though they may be more expensive.

8
Q

What is choice architecture?

A

This refers to how choices may be influenced by the way they are presented to the decision maker. E.g. opt in vs opt out.

9
Q

What is framing?

A

A form of choice architecture that influences choices by the way numbers and words are used. E.g “Less than £3 a day” Instead of “£1000 a year”

10
Q

What are nudges?

A

A form of choice architecture that influences consumer behaviour through gentle suggestions such as “5-a-day” encouraged a greater consumption of fruit and veg.

11
Q

What is defualt choice?

A

A form of choice architecture where the socially desirable outcome is the default option.

12
Q

What is mandated choice?

A

A stronger form of choice architecture where people are required by law to make a choice.

13
Q

What is restricted choice?

A

Restricted choice is another way if influencing peoples choices, if people are given too much choice then they can sometimes not make an effective choice.