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Key Concepts In

Behavioral Economics

Behavioral economics is the study of how psychological factors influence decision-making.

Behavioral economics is a fascinating field that explores the ways in which our decision-making processes can be influenced by psychological factors. By understanding these factors, we can gain insights into why we make the choices we do, and how we can make more informed decisions in the future.

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The Halo Effect

People tend to assume that if someone is good at one thing, they are likely to be good at other things as well.

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Choice Overload

When presented with too many choices, people may experience decision fatigue and make suboptimal decisions or avoid making a decision altogether.

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Behavioral Contagion

People's behavior can be influenced by the behavior of those around them. 

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Nudging

Small changes to the environment or presentation of information can nudge people towards certain behaviors or decisions.

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Priming

People are more likely to follow the behaviors and beliefs of others, particularly those they perceive as similar to themselves.

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Status Quo Bias

 People's decisions are influenced not only by the potential outcomes, but also by the way those outcomes are framed.

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Reciprocity

People are more likely to reciprocate kind actions or favors, even when they are not obligated to do so.

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Social Proof

People are more likely to follow the behaviors and beliefs of others, particularly those they perceive as similar to themselves.

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Prospect Theory

 People's decisions are influenced not only by the potential outcomes, but also by the way those outcomes are framed.

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Sunk Cost Fallacy

People tend to continue investing in something (time, money, energy) even when it no longer makes sense to do so, simply because they have already invested in it.

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Framing Effect

The way information is presented can influence how people perceive and interpret it.

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Hindsight Bias

People tend to believe, after an event has occurred, that they could have predicted it with greater accuracy than they actually could have.

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Cognitive Dissonance

People experience discomfort when their beliefs or actions conflict with one another, and will often adjust their beliefs or actions to reduce the discomfort.

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Overconfidence Bias

People tend to overestimate their own abilities and the accuracy of their beliefs and judgments.

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Availability Heuristic

 People tend to overestimate the likelihood of events that are easily recalled or available in memory.

Choice Architecture
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The way choices are presented can influence people's decisions.

About Behavioral Economics

In this blog post, we will explore the twenty most common concepts in behavioral economics, including anchoring, confirmation bias, loss aversion, and many others. We will provide a description of each concept, along with image suggestions to help illustrate the idea. Whether you are new to the field of behavioral economics or a seasoned expert, this post is sure to provide valuable insights into the ways in which our minds work and the factors that can influence our decision-making. So, without further ado, let's dive in!

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Endowment Effect

People tend to value things they own more than things they do not, simply because they own them.

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Loss Aversion

People feel the pain of losses more strongly than the pleasure of gains, and are thus more likely to avoid losses than to seek out gains.

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Anchoring

People tend to rely too heavily on the first piece of information they receive when making decisions, even when that information may be irrelevant or arbitrary.

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Confirmation Bias

People tend to seek out information that confirms their preexisting beliefs, and ignore or discount information that contradicts them.

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