Behavioral Economics
Behavioral economics asks questions about the economic decisions that people make. Do individuals always act in their own best interest when it comes to maximizing utility, efficiency, and value?
![Jodhpur, Rajasthan, India, Indian Sub-Continent, Asia](https://www.investopedia.com/thmb/T4N0WABzzTRPH1jw-pr3JhmzqN4=/3875x2507/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-148751926-755ae137756a480c9ac7805e4f10aca6.jpg)
Caste System: Meaning, Impact, and Contemporary Perspectives
![Dusty street scene](https://www.investopedia.com/thmb/akys78s0y7SoH8ax1O2OBqkq5aw=/2132x1407/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-95732127-8efb1deeb7bb49b2a106218fc305082a.jpg)
Caste System Discrimination: Meaning and Its Consequences
![A woman with shopping bags walks on a city street.](https://www.investopedia.com/thmb/2c0gOlWROQVjtqtHggq7ulVcqhs=/8066x5136/filters:no_upscale():max_bytes(150000):strip_icc()/womanshoppingbags-2ed991a6c8eb4e19bbfdfb1dbe1d0678.jpg)
Somatic Marker Hypothesis and Economic Decision Making
![Availability bias](https://www.investopedia.com/thmb/4KJ0qpVtnGaO1bLyBioD4Pmeeis=/1184x887/filters:no_upscale():max_bytes(150000):strip_icc()/availability-bias-56a22dc65f9b58b7d0c7862a.jpg)
Recency (Availability) Bias: What it is, How it Works
![Game Theory](https://www.investopedia.com/thmb/Bseg1Ms53X1RsvZRkTagBq7jgZA=/1500x1000/filters:no_upscale():max_bytes(150000):strip_icc()/gametheory-072c88d1036741f180469734832a6d14.png)
Game Theory: A Comprehensive Guide
![Karl Marx](https://www.investopedia.com/thmb/krOlfdxa7j32-MYN1tm9jBMC4dg=/1500x1000/filters:no_upscale():max_bytes(150000):strip_icc()/karl-marx-ba4e5e494a7140439b835c318ab80d00.jpg)
Karl Marx: His Books, Theories, and Impact
![Conflict Theory](https://www.investopedia.com/thmb/trui-BwfSONEa32ss00RYXh10TE=/1500x1000/filters:no_upscale():max_bytes(150000):strip_icc()/conflict-theory-Final-66da57019fd84b9e906d0a6114cb79a8.png)
Conflict Theory Definition, Founder, and Examples
![Organizational Behavior](https://www.investopedia.com/thmb/iFmYgzSVgdbjVQ4qXwJbEnYCMbo=/1500x1000/filters:no_upscale():max_bytes(150000):strip_icc()/organizational-behavior-9d705b2e75d34e4e9816a34509e360ed.jpg)
What Is Organizational Behavior (OB), and Why Is It Important?
![Rational Choice Theory](https://www.investopedia.com/thmb/QuLs6KMWrgAQ3B9_Ejl3VVuXg38=/1080x722/filters:no_upscale():max_bytes(150000):strip_icc()/Rational-choice-theory-3cf73bf57f814075b80b676573a072a6.jpg)
Rational Choice Theory: What It Is in Economics, With Examples
![Two older women look at smartphone](https://www.investopedia.com/thmb/MBY8trHsdz5k6x9Zm-3HSPe-fKs=/5445x3965/filters:no_upscale():max_bytes(150000):strip_icc()/INV_IllusoryTruthEffect_GettyImages-1356178068-82e5a151b1be47abad457db52b9e21fa.jpg)
Illusory Truth Effect: What It Is, Why It Happens, How to Avoid It
![Woman lying on a bed, looking at a laptop computer.](https://www.investopedia.com/thmb/-pGe5HUkAnAgyLrIV7BZZVqYQrw=/8192x5464/filters:no_upscale():max_bytes(150000):strip_icc()/INV_Normalcy_Bias_GettyImages-1410257254-35f4ac86875a42e8b7be45bbd4ac9adf.jpg)
Normalcy Bias: How It Could Affect Your Investing
![](https://www.investopedia.com/thmb/voTDveJnZKWvrh2csOfBRI6dONY=/680x440/filters:no_upscale():max_bytes(150000):strip_icc()/investing8-5bfc2b8d46e0fb005144dbe3.jpg)
Barriers to Entry: Understanding What Limits Competition
![Man dangling out of loft hatch with one foot touching step ladder](https://www.investopedia.com/thmb/Q1CLFCkKCUc6CV3pLSs01BM_7KE=/2000x1500/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-200199845-001-6220f646fca24188a464a481aaf8db44.jpg)
Moral Hazard vs. Morale Hazard: What's the Difference?
![Detail of a Golden Bull Breaking Through the Finance Section of a Newspaper](https://www.investopedia.com/thmb/5E8x6C4bZeNGgDdQmZ7IsS8orIc=/1500x1000/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-101884783-ad3b0d6130b4425da932616a4dbf557d.jpg)
Animal Spirits: Meaning, Definition in Finance, and Examples
![Business people hold paper jigsaw puzzle and solving puzzle together](https://www.investopedia.com/thmb/bTruAdiVVEaQGrWX2X47makWI40=/2120x1414/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-1128030223-7c627bb9db5f4fbab8c793535ded7eed.jpg)
What Does Tit for Tat Mean, and How Does It Work?
![Revealed Preference: A theory that you can determine what consumers' preferences are by observing what they buy under a range of different circumstances.](https://www.investopedia.com/thmb/KRlR6gUl_G7xxjeuTahRfMljgwI=/4000x2700/filters:no_upscale():max_bytes(150000):strip_icc()/revealed-preference.asp-final-54429a90ebde4f058f54f8557b2ac5d5.png)
Revealed Preference in Economics: What Does It Show?
![Cropped Hand Holding Gavel Against People During Auction](https://www.investopedia.com/thmb/TK9zVWbEQCso_2COz1wAgSp_ZNg=/6000x4000/filters:no_upscale():max_bytes(150000):strip_icc()/cropped-hand-holding-gavel-against-people-during-auction-1057581624-a357d9ebc5ab4182bcf658f01834a79d.jpg)
Winner's Curse: Definition, How It Works, Causes, and Example
![Midsection of Businessman Using Calculator and Laptop at Desk](https://www.investopedia.com/thmb/CxHvo_Z3AwRN3NV1yEmFrd2v_K4=/1500x1000/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-1053748996-d702f4cafd1e401a84dbf1c9ebcc2233.jpg)
Rational Behavior: Definition and Example in Economics
![Financial pundit Jim Cramer](https://www.investopedia.com/thmb/ufPgyln8yp6ChVPMJfbLUy2uGJY=/3000x2026/filters:no_upscale():max_bytes(150000):strip_icc()/JimCramer-724088bd5d4c4937a422e27192dd761a.jpg)
Understanding Information Cascades in Financial Markets
![Frustrated Young Man with Laptop, Sitting on the Floor](https://www.investopedia.com/thmb/Wdq3bpP3fHu7UBhGuafOMzxnFwg=/1500x1000/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-1035011788-628ab26e1db24349af733475d0468765.jpg)
Discouraged Worker: Definition, Causes, Vs. Unemployed
![Socialism](https://www.investopedia.com/thmb/6TFcHFZ3lndno9N-MXQhmZg1Y3k=/1500x1000/filters:no_upscale():max_bytes(150000):strip_icc()/socialism_sourcefile-bbc6e75ce4904886b34aa931b3cea953.jpg)
Socialism: History, Theory, Analysis, and Examples of Socialist Countries
![A hand holds a poster sign that reads "SAVE THE MIDDLE CLASS" in black marker on yellow paper in the middle of a crowd.](https://www.investopedia.com/thmb/9J6WX3tWJeXwlj9plusKrSC3OLk=/3000x1996/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-155096621-5683321f5f9b586a9efc9f89.jpg)
What Is Middle Class Income? Thresholds, Is It Shrinking
![Businessman in a suit standing outside a building look outward with a tablet in his hand](https://www.investopedia.com/thmb/4zglMAuxciXyUEQ_WtwLlUKYxZo=/2121x1414/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-1205721253-318c8bd9162a4ab488ab4556f938394d.jpg)
What Is a Laissez-Faire Economy, and How Does It Work?
![couple managing finance and investment online, analyzing stock market trades with mobile app on smartphone](https://www.investopedia.com/thmb/ntOcESJseyr_UT43YDLq6trO7bw=/4000x2667/filters:no_upscale():max_bytes(150000):strip_icc()/Primary-Image-how-to-trade-forex-7499569-44467e75edf24375a03f63fe6f791310.jpg)
Why Do Supply Shocks Occur and Who Do They Affect?
![](https://www.investopedia.com/thmb/osd0hnqJCUMsLJ6fYo1a1-ZxorY=/680x440/filters:no_upscale():max_bytes(150000):strip_icc()/shutterstock_67023106-5bfc2b9846e0fb005144dd87.jpg)
How Does Deflation Impact Consumers?
![A dart arrow hitting in the target center of a dartboard.](https://www.investopedia.com/thmb/8Sn-tPkOpZfnKttrpmJzwUlt9Lk=/1999x1499/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-1153006835-5185da5f42114a5d9ae89cc22f66ee60.jpg)
What Are the Odds of Scoring a Winning Trade?
![Clock](https://www.investopedia.com/thmb/VWiE6F-CY3QACxIfLHvZ6Lbof3s=/5347x3486/filters:no_upscale():max_bytes(150000):strip_icc()/clock-1129436381-d43365a9ab2a4644830227ed7acfffab.jpg)
Time-Preference Theory of Interest: Overview and History
![Man’s hand with image of AI in palm](https://www.investopedia.com/thmb/otoyeX9gn-xiD-US1_Vq95DrK-k=/6048x3402/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-1458720631-e28e5462e407419f847a309e478cd8b9.jpg)
Internet Bubble: What It Means and How It Works
![Millenial Group of Friends Going out Having Fun Together](https://www.investopedia.com/thmb/NwJHdg9Gov-SaTPxfwNzZU7Qbto=/1500x1000/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-917590974-9fbb66a431d9446a90196edaeeac1a32.jpg)
How the Financial Crisis Affected Millennials
![Diffusion of Innovations Theory: How new technological and other advancements spread throughout societies and cultures.](https://www.investopedia.com/thmb/BNYw-g6M33S0I5HSaxSnrpae2mo=/4000x2700/filters:no_upscale():max_bytes(150000):strip_icc()/diffusion-of-innovations-theory.asp-final-7ffecfaf70054216b54d7d5fe1d17e32.png)
Diffusion of Innovations Theory: Definition and Examples
![Oil platform at sea at the northern lights background. Oil production in the north - stock photo](https://www.investopedia.com/thmb/-ha5LiKTy0__bQPYHgV3DXcJUps=/2121x1414/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-1322973514-500559880f704d2f86b7f8cd5acabc08.jpg)
How Do Supply and Demand Affect the Oil Industry?
![](https://www.investopedia.com/thmb/2iUTjOFVXHuPtEEl6Uv-Tjrjdpw=/380x253/filters:no_upscale():max_bytes(150000):strip_icc()/138014825-5bfc2b9c46e0fb00260b2621.jpg)
Adaptive Market Hypothesis (AMH): Overview, Examples, Criticisms
![](https://www.investopedia.com/thmb/N3K9ODstOeVG7lRC_p5EAK2k4sY=/205x136/filters:no_upscale():max_bytes(150000):strip_icc()/investing11-5bfc2b90c9e77c00519aa65f.jpg)
Belt and Suspenders: What it Means, How it Works, Example
![Prospect Theory: The idea that investors place more weight on perceived gains than perceived losses.](https://www.investopedia.com/thmb/xgiu3y5eGl8Q57Lqx1EICIq9nok=/4000x2700/filters:no_upscale():max_bytes(150000):strip_icc()/prospecttheory.asp-FINAL-55296758049c4501808f54b52747cb35.png)
Prospect Theory: What It Is and How It Works, With Examples
![](https://www.investopedia.com/thmb/N3K9ODstOeVG7lRC_p5EAK2k4sY=/205x136/filters:no_upscale():max_bytes(150000):strip_icc()/investing11-5bfc2b90c9e77c00519aa65f.jpg)
Evolutionary Economics: Overview, History, Examples
![](https://www.investopedia.com/thmb/Pc3t97MlcL3XOwGavrLT1dkLvRI=/205x136/filters:no_upscale():max_bytes(150000):strip_icc()/investing15-5bfc2b8fc9e77c00519aa65b.jpg)
Financial Accelerator: What it is, History
![](https://www.investopedia.com/thmb/mebR0w7ARo08CptMg8tU7vxSr-c=/680x440/filters:no_upscale():max_bytes(150000):strip_icc()/investing7-5bfc2b8d46e0fb0051bddff8.jpg)
Common-Pool Resource: Definition, How It Works, and Examples
![A hand holding an Apple Watch with the startup graphic on the screen.](https://www.investopedia.com/thmb/MULxjJLd7RbAW49GjO-weSPjCto=/1500x1000/filters:no_upscale():max_bytes(150000):strip_icc()/001-apple-watch-won-t-reset-how-to-fix-the-problem-5194116-219258405b2346be9683aebcf72c44c8.jpg)
Market Overhang: What it Means, How it Works, Example
![Successful African business team at a meeting](https://www.investopedia.com/thmb/z7zwuCyTtjEyFGTSX0gMCatag50=/2121x1414/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-1058042454-781dba39a28648d68c4ad79a30173ba7.jpg)
Shadowing: Definition and How It Works, Vs. Interning
![Close up Hands of Businessman Working With Business Document and Laptop on the Table](https://www.investopedia.com/thmb/D0Z53WAHXswo_OoFlpHaoMxnjYk=/1500x1000/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-953844116-589a06d48efe4db0b326a4ef372f2f58.jpg)
Intraday Return: What it Means, How it Works
![Symbols](https://www.investopedia.com/thmb/-zhhJkjtdWtM7LtIDUo_mY1vSq8=/680x440/filters:no_upscale():max_bytes(150000):strip_icc()/thinkstockphotos_80410231-5bfc2b97c9e77c0026b4fb20.jpg)
What Are the 4 Types of Economic Utility?
![](https://www.investopedia.com/thmb/hApxKeRPaiUlsiJJqEdnzJWb-Hk=/205x136/filters:no_upscale():max_bytes(150000):strip_icc()/activetrading20-5bfc2b9a4cedfd0026c11ae2.jpg)
Bioeconomics: What it is, How it Works, Example
![](https://www.investopedia.com/thmb/osd0hnqJCUMsLJ6fYo1a1-ZxorY=/680x440/filters:no_upscale():max_bytes(150000):strip_icc()/shutterstock_67023106-5bfc2b9846e0fb005144dd87.jpg)
Are There Any Exceptions to the Law of Demand in Economics?
![Two people skydiving at sunset](https://www.investopedia.com/thmb/hvbP7dDI1vL0Qsc-NLzIim-ip0k=/2121x1414/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-150471246-e946986f81fe4b8cbd04eaf08e20d8eb.jpg)
What Are Examples of Moral Hazard in the Business World?
![](https://www.investopedia.com/thmb/aBzZi4XuSDdWrXNwB-CwEH40FyQ=/380x254/filters:no_upscale():max_bytes(150000):strip_icc()/war_bonds-5bfc343f46e0fb00260cc1f1.jpg)
War's Influence on Wall Street
![Couple Saving Money](https://www.investopedia.com/thmb/jlxsHz_4EFJHHMI0UWQLOS-cLO0=/1500x1000/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-183197077-saving-money-59bd8be1af5d3a0010d8b2d2.jpg)
How Interest Rates Help Promote Saving and Investing
![Home Equity](https://www.investopedia.com/thmb/SlmQKuviQjdUfcmPPmSSC4IRaJg=/2122x1415/filters:no_upscale():max_bytes(150000):strip_icc()/185121887-56a066503df78cafdaa16a14.jpg)
A Study on the Wealth Effect and the Economy
![Woman using a credit card reader to pay at a coffee shop counter](https://www.investopedia.com/thmb/cePyEEAC96-pF6YclL0yEo-SmMU=/6720x4480/filters:no_upscale():max_bytes(150000):strip_icc()/INV_PaymentGateway_GettyImages-1354968155-14466e5a344e4ebf990c8e1ec09477e2.jpg)
What Marginal Utility Says About Consumer Choice
![](https://www.investopedia.com/thmb/nkTpJLCGGbMUwhxb3QsxB7ywW10=/205x136/filters:no_upscale():max_bytes(150000):strip_icc()/stocks-lrg-4-5bfc2b1dc9e77c00517fbe69.jpg)
How Intangible Assets Provide Value to Stocks
![A man with money flying out of his wallet](https://www.investopedia.com/thmb/PPIZ-IGiROw7d-PGolI3kRkAqg0=/2063x1453/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-638948636-5e5a481e2a07439e83316791a5930429.jpg)
Consumer Spending: Definition, Measurement, and Importance
![](https://www.investopedia.com/thmb/LhnsGBFR6E4BTaS7IZmt-CS7fg8=/205x136/filters:no_upscale():max_bytes(150000):strip_icc()/investing19-5bfc2b8f4cedfd0026c1194c.jpg)
Kelly Criterion: Definition, How Formula Works, History, and Goals
![Businesswoman working in an office with a laptop on her desk, overlaid with financial bar graph](https://www.investopedia.com/thmb/Xetyf0xGXBVQnWe176Ef56mB41E=/2570x1167/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-1286815175-ef9443f3b4bf40dfbf008dd2f871feac.jpg)
House Money Effect: Meaning, Examples and FAQs
![](https://www.investopedia.com/thmb/cGoi5HAOe7QMI5p41B7_knLVSp4=/680x440/filters:no_upscale():max_bytes(150000):strip_icc()/piled_up_books-5bfc36cfc9e77c005879a0c5.jpg)
How to Read the Michigan Consumer Sentiment Index
![](https://www.investopedia.com/thmb/cnmJQMxGFfdCWf9LN_hIXytUAAY=/380x254/filters:no_upscale():max_bytes(150000):strip_icc()/77896374-5bfc38ba46e0fb0026051ede.jpg)
Cognitive vs. Emotional Investing Bias: What’s the Difference?
![Anchoring](https://www.investopedia.com/thmb/zYUilCXQ6PVGvEUkD8NS9otFut8=/161x240/filters:no_upscale():max_bytes(150000):strip_icc()/anchor-56b77e573df78c0b1360ed8a.jpg)
Anchoring in Investing: Overview and Examples
![New York Stock exchange and the street in front of it](https://www.investopedia.com/thmb/CYlQdSSlPGLo1XMUYm2qdAVAqHo=/2121x1414/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-1167037043-7eeb2c309c274503a51c9d6450bce1e5.jpg)
False Market: Meaning, Causes, Example
![Save to Board Businesswoman Filling Survey Form On Mobile Phone](https://www.investopedia.com/thmb/VUmWuwtAjc033k58xTGHanZuidI=/2120x1415/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-600415982-f766092b59ea46c7895f77b64584befa.jpg)
Michigan Consumer Sentiment Index (MCSI): What it Means, Uses
![Investment Multiplier: The stimulative effects of public or private investments on the economy.](https://www.investopedia.com/thmb/Kq-EkFFDyl2uYfmnGdyCTEZJRRE=/4000x2700/filters:no_upscale():max_bytes(150000):strip_icc()/Investment-multiplier_final-9510b82696b64675b0cb1776578117af.png)
Investment Multiplier: Definition, Example, Formula to Calculate
![Y2K: Shorthand for "the year 2000."](https://www.investopedia.com/thmb/tkFoL0r-_hVsOdl1kByzIbEved0=/4000x2700/filters:no_upscale():max_bytes(150000):strip_icc()/y2k.asp-FINAL-4ddac6f6932e4bbd8aa4124c3b5f8dfb.png)
The Truth About Y2K: What Did and Didn't Happen in the Year 2000
![Stock Chart With Fibonacci Retracement Indicator in Monitor Investment Concept](https://www.investopedia.com/thmb/CAtd9bDimEOWD3MPBOgWqoyYq40=/1500x884/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-637016134-d27d13f1b51e42399a2f515f90cd54c0.jpg)
Multinomial Distribution: What It Means and Examples
![Stock traders looking at wins on a monitor](https://www.investopedia.com/thmb/PXM0n2ZsJGwOR_Sq5RVM83bi-r4=/6000x4000/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-2032611419-02c9aab8875d4ffda84a4117c5ed386a.jpg)
What Is a Minsky Moment? Definition, Causes, History, and Examples
![](https://www.investopedia.com/thmb/tapXn9wAxYZXg_93dw1Bj7fhgxY=/205x136/filters:no_upscale():max_bytes(150000):strip_icc()/investing12-5bfc2b8f46e0fb00517be087.jpg)
Black Monday: Definition in Stocks, What Caused It, and Losses
![Office Building](https://www.investopedia.com/thmb/fDpWuxOAMRsVXJGF6ENzO7AQ0y0=/680x440/filters:no_upscale():max_bytes(150000):strip_icc()/business_building_153697270-5bfc2b9846e0fb0083c07d69.jpg)
Confirmation Bias: Overview and Types and Impact
![Human Development Index (HDI)](https://www.investopedia.com/thmb/WMgy-GA1vBp91_JV6P-pNXaq84E=/4000x2700/filters:no_upscale():max_bytes(150000):strip_icc()/human-development-index-hdi.asp-final-57aa610efde34482bf9a48594216674a.jpg)
What Is the Human Development Index (HDI)?
![](https://www.investopedia.com/thmb/I4gq9p7lNVdmRhddaRDowwMaCm4=/680x440/filters:no_upscale():max_bytes(150000):strip_icc()/activetrading3-5bfc2b9ac9e77c005143f2fe.jpg)
Herd Instinct: Definition, Stock Market Examples, & How to Avoid