Title: Behavioral economics - Wikipedia
Headings: Behavioral economics
Behavioral economics
Contents
History
Nobel laureates
Bounded rationality
Prospect theory
Nudge theory
Criticisms
Behavioural economics concepts
Search heuristics
Satisficing
Directed cognition
Elimination by aspects
Heuristics and cognitive effects
Mental accounting
Anchoring
Herd behavior
Framing effects
Biases and fallacies
Present bias
Gambler's fallacy
Narrative fallacy
Loss aversion
Recency bias
Confirmation bias
Familiarity bias
Status quo bias
Behavioral finance
Traditional finance
Evolution
Quantitative behavioral finance
Economic reasoning in animals
Animal studies
Labor supply
Demand
Applied issues
Intertemporal choice
Behavioral game theory
Artificial intelligence
Other areas of research
Natural experiments
Criticism
Responses
Related Fields
Experimental economics
Neuroeconomics
Evolutionary psychology
Notable people
Economics
Finance
Psychology
See also
References
Citations
Sources

Content: A total of six Nobel prizes have been awarded for behavioral research. Bounded rationality
Herbert A. Simon, winner of the 1975 Turing award and the 1978 Nobel Prize in economics
Bounded rationality is the idea that when individuals make decisions, their rationality is limited by the tractability of the decision problem, their cognitive limitations and the time available. Decision-makers in this view act as satisficers, seeking a satisfactory solution rather than an optimal one. Herbert A. Simon proposed bounded rationality as an alternative basis for the mathematical modeling of decision-making. It complements "rationality as optimization", which views decision-making as a fully rational process of finding an optimal choice given the information available. Simon used the analogy of a pair of scissors, where one blade represents human cognitive limitations and the other the "structures of the environment", illustrating how minds compensate for limited resources by exploiting known structural regularity in the environment. Bounded rationality implicates the idea that humans take shortcuts that may lead to suboptimal decision-making. Behavioral economists engage in mapping the decision shortcuts that agents use in order to help increase the effectiveness of human decision-making. One treatment of this idea comes from Cass Sunstein and Richard Thaler 's Nudge. Sunstein and Thaler recommend that choice architectures are modified in light of human agents' bounded rationality.