Category: Behavioral Economics

Behavioral economics focuses on the individual’s economic decision-making processes, whereas behavioral finance focuses studies how individual behavior, including irrational behavior/cognitive biases, impacts financial decisions and markets. They are sometimes used interchangeably.  Some economists believe that behavioral economics is a better label for their field because it addresses human behavior in labor markets, consumer markets, and… Continue reading behavioral economics vs behavioral finance: All you need to know

Anchor Bias is a cognitive bias that causes us to make decisions based on the first piece of information we encounter, rather than considering all available evidence and making an informed decision.  Anchoring Bias Anchoring bias is a term used in psychology to describe the human tendency to rely too heavily on one piece of… Continue reading Why anchoring bias is so tricky | All you need to know

The Pygmalion effect, named after the Greek myth of Pygmalion, who carved an ivory statue of a woman and then fell in love with his creation, is the phenomenon in which people develop high expectations for others and thus need less effort to make them succeed. It can often happen when someone with power or… Continue reading Pygmalion effect in business and real life

An anchoring refers to a cognitive bias that occurs when the first piece of information that people have been exposed to influences their judgment. An anchoring bias occurs when people use an initial piece of information (the anchor) to make subsequent estimates. For example, a 52-week anchoring bias occurs when people anchor their current estimate… Continue reading 52-Week anchoring | Effects and solutions you need to know

Nash equilibrium is a term used in game theory to describe a situation in which two or more players may want to reach an agreement but cannot because they have different incentives. It studies the behavior of games such as prisoner’s dilemma, Tit-For-Tat, and cooperative games. Nash equilibrium definition Nash equilibrium is a mathematical concept… Continue reading Nash Equilibrium Examples: The Best Way to Understand It