Prospect Theory
A behavioral economic theory that describes how people choose between probabilistic alternatives that involve risk, where the probabilities of outcomes are known.
109 topics found for
“economic decision-making”
Escalation of Commitment
A cognitive bias where individuals or organizations continue to invest in a failing project or decision due to the amount of resources already committed.
Hyperbolic Discounting
A cognitive bias where people disproportionately prefer smaller, immediate rewards over larger, later rewards.
Risk-as-Feelings Theory
A theory that emphasizes the role of emotions in risk perception and decision-making, where feelings about risk often diverge from cognitive assessments.
Relativity
A principle often used in behavioral economics that suggests people evaluate options based on relative comparisons rather than absolute values.
Optimism Bias
A cognitive bias that causes people to believe they are less likely to experience negative events and more likely to experience positive events than others.
Preference Reversal
A phenomenon where individuals' preferences between options change when the options are presented in different ways or contexts.
Decoy Effect
A cognitive bias where consumers change their preference between two options when presented with a third, less attractive option.
Reference Dependence
A cognitive bias where individuals evaluate outcomes relative to a reference point rather than on an absolute scale.