Understanding the role of human phycology in economics to explain why people behave the way they do in the real world. Sharing three of its interesting concepts below.
1. Bounded Willpower
People sometimes make choices that are not in their long-term interests. They succumb to short-term temptations e.g., watching YouTube videos.
2. Bounded rationality
People have limited cognitive capacity, limited information, and limited time to make fully rational decisions. This contradicts classical economics.
3. Loss Aversion
Humans are more strongly affected by losses than by gains and hence commit more resources to cut the losses rather than putting them to use for another gain.
Economics is the foundation on which business operates. We had a great time in Economics class with the leading economist in Ireland Jim Power.
Learned ropes of supply-demand, monetary and fiscal policies. Class enticed me to explore economics further and the topic which I found most interesting is behavioral Economics
#economics #management #business #lossaversion
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