Behavioral Game Theory

Behavioral game theory is a field that studies how people actually make decisions in strategic situations, considering psychological factors like emotions, fairness, and habits. Unlike traditional game theory, which assumes players always act rationally to maximize their gains, behavioral game theory recognizes that real-world choices are influenced by biases, social preferences, and incomplete information. It uses experiments and observations to understand why people sometimes make unexpected or “irrational” moves, helping to better predict and explain behavior in everyday interactions, negotiations, and economic situations.