Behavioral Economics Uses Insights from Both Psychology and Economics

question 176

True/False

Behavioral economics uses insights from both psychology and economics.

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Definitions:

Confirmation Error

A cognitive bias that leads individuals to favor information or interpretations that confirm their pre-existing beliefs or hypotheses.

Representativeness Bias

A cognitive bias where individuals inaccurately judge the probability of an event by comparing it to an existing prototype in their minds.

Heuristics

Heuristics represent simplified strategies or rules of thumb that individuals use to make decisions or solve problems quickly when faced with complex information or limited time.

Uncertainty Reduction

The process of acquiring information to minimize the uncertainties about decision-making or more fully understand a situation.