Behavior economics

Behavioral economics studies how psychological factors influence people's economic decisions, often causing them to act against traditional rationality assumptions. It examines biases, emotions, social influences, and heuristics that shape choices in areas like saving, spending, and investing. Unlike classical economics, which assumes individuals always make logical decisions to maximize utility, behavioral economics recognizes that humans are sometimes irrational, affected by shortcuts and biases. Understanding these influences helps design better policies, products, and interventions that align with actual human behavior, improving economic outcomes and decision-making processes.