norms, identities, and decision-making

Question 1

what is behavioral economics?

Answer 1

merges psych and econ to provide insight into why indivduals act in ways that aren’t in their own interests

challenges the assumption of rationality

Question 2

what are the 3 components of the rational choice model?

Answer 2

1. identify options
2. identify causal structure
3. rank feasible alternaives

Question 3

how do people actually make decisions?

Answer 3

HEURISTICS (mental shortcuts to make decisions quickly and efficiently)

heuristics -> cognitive biases

Question 4

what is anchoring?

Answer 4

tendency to make a decision based on first information received

Question 5

what is prospect theory?

Answer 5

people are risk averse sometimes, risk seeking other times

DEPENDS ON FRAMING!

domain of gains = risk averse
domain of losses= risk seeking

Question 6

what is loss aversion?

Answer 6

potential losses matter more than potential gains

Question 7

what does international relations look like without rationality assumption?

Answer 7

• hueristics and cognitive biases
• prospect theory
• use and abuse of historical analogis