Behavioral Economics

Categories: Econ, Accounting

The study of how and why people make the economic decisions (purchases, investments, etc.) they do.

George spent a month's salary on Christmas decorations, including a 30-foot tree, a papier-mâché sleigh levitated by translucent drones, and a Beats by Dre sound system blaring carols from his rooftop. Did George spend this money because the decorations were objectively worth a full month's salary, or did he do it just to show-up his neighbor, Ringo, who recently hung a wreath on his door?

This is a question that behavioral economics seeks to answer, but only George and his rabbi may ever truly know.

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