Behavioural Economics

The Hawthorne Effect occurs when individuals adjust their behaviour as a result of being watched or observed.

A Moral Hazard is where an individual becomes reckless because they know another party will pay for the effects of their actions.

Game theory is the study of strategic decision making between individuals.

Bounded rationality highlights the limitations of humans’ ability to make optimal decisions.

Anchoring is a cognitive bias where a specific piece of information is relied upon to make a decision.

The framing effect is a cognitive bias that impacts our decision making when said if different ways. In other words, we are influenced by how the same fact or question is presented.

Nash equilibrium refers to the situation whereby a group of individuals choose the most optimal strategy and do not deviate from that initial decision. Individuals stick to the initial decision in the knowledge that all other options are inferior.

The fundamental attribution error is where we think the cause of an individuals action is because of their personality. However, it is in fact due to something else.

Confirmation bias occurs when people deliberately exclude or place less weight on new evidence which contradicts existing beliefs.