behavioral economics
an interdisciplinary field concerned with understanding how heuristics, biases, and other psychological variables influence economic behavior. In contrast to the standard view within traditional economics that people are rational actors who always make choices to maximize their well-being, behavioral economists view human rationality as limited and subject to personal, social, and situational influences (see bounded rationality). Thus, they seek to devise more realistic, psychologically plausible models of economic behavior to account for a variety of decision-making anomalies and market inconsistencies that have been observed, such as loss aversion (the tendency to go to disproportionately great lengths to avoid perceived losses), temporal discounting (the tendency to prefer small rewards received sooner to larger ones received later), the endowment effect, the framing effect, the magnitude effect (the
tendency to discount smaller gains more rapidly than larger ones), the sign effect (the tendency to discount gains more rapidly than losses), the status-quo bias (the tendency to keep things as they are and avoid making changes), and the sunk-costs effect (the tendency to continue a course of action in which one has already invested money, time, or effort). [derived primarily from the work of Daniel Kahneman and Amos Tversky]