Behavioral economics aims to study various factors, such as psychological and emotional factors, which tend to affect the decisions consumers or producers make with respect to an economic situation. It also analyses how these factors and decisions may differ from those theorized by the concept of rationality in economics, which says that humans are rational beings and take decisions solely in accordance with logic. It relates to “bounded rationality” which means that human rationality is limited due to finite thinking capacity, information, and time.

In a way, behavioral economics can be considered to be an overlap of economics and psychology…

Aditya Syam

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