Behavioral Economists Examine Choices That Consumers Make That Are Not

question 153

Essay

Behavioral economists examine choices that consumers make that are not economically rational.Economists generally assume that people are rational; that is, they weigh the benefits and costs of an action and choose an action only if the benefits outweigh the costs.Why do consumers not act rationally when the result is that they make themselves worse off?

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Definitions:

Psychological Dependence

A condition characterized by the belief that one cannot function or feel well without the use of a substance.

Physiological Dependence

A condition wherein the body adapts to the presence of a drug, leading to withdrawal symptoms when the substance is reduced or not ingested.

Tolerance

The process by which the body becomes less responsive to a substance or stimulus after repeated exposure.

Withdrawal

The process of reducing or eliminating the use of a substance after prolonged or heavy use, often leading to uncomfortable physical and psychological effects.