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From rational choice to behavioural economics

From rational choice to behavioural economics

Flowchart comparing the rational agent benchmark with behavioural influences such as bounded rationality, heuristics, present bias, loss aversion and social norms, plus policy responses like nudges, defaults, framing and simplification

Traditional microeconomics starts with the rational economic agent. This benchmark assumes people have stable preferences, process available information logically, and choose the option that maximises utility.

1.2.3 Aspects of behavioural economic theory Lesson

  1. A Level
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  3. /1.2.3 Aspects of behavioural economic theory