Behavioral Economics in Organizations

Behavioral economics in organizations combines insights from psychology and economics to understand how people make decisions in the workplace. It examines how emotions, biases, and social influences affect choices, often leading to outcomes that differ from traditional economic theories. For example, employees might be swayed by peer behavior or make decisions based on perceived fairness rather than pure rationality. By recognizing these patterns, organizations can design better policies, improve motivation, enhance teamwork, and ultimately drive better performance by creating environments that align with how people naturally think and behave.