Behavioural Decision Theory

Behavioral Decision Theory studies how people make choices and decisions, considering both rational thinking and psychological factors. Unlike traditional theories that assume decision-makers act purely logically, this approach acknowledges that emotions, biases, social influences, and cognitive limitations significantly impact our choices. It explores why people often deviate from expected rational behaviors, such as overconfidence or loss aversion, ultimately aiming to understand and predict decision-making patterns in various contexts, from personal choices to public policy. By examining these factors, we can improve decision-making processes and outcomes in everyday life.