Behavioural economics is a field of study that combines insights from psychology and economics to understand how individuals make decisions. Unlike traditional economic theories that assume people always make rational choices based on self-interest, behavioural economics recognizes that human decision-making is often influenced by cognitive biases, emotions, and social factors.
Researchers in behavioural economics study phenomena such as loss aversion, prospect theory, and heuristics to gain a more realistic understanding of economic behaviour. This interdisciplinary approach has practical applications in areas like public policy, finance, marketing, and organizational behaviour, as it provides insights into decision-making processes that deviate from classical economic assumptions. Nobel laureates Daniel Kahneman and Richard Thaler are among the prominent figures associated with the development of behavioural economics.