Behavioral Economics

Entrepreneurs need to know about behavioral economics. Practitioners talk about how people behave and how their thinking and their socialization affects their behavior. And if there are any anyones out there who need more fully to understand why people think and act the way they do, who are they if they aren't entrepreneurs? Wikipedia, the free, on-line encyclopedia, describes it this way:

Behavioral economics and behavioral finance are closely related fields which apply scientific research on human and social cognitive and emotional biases to better understand economic decisions and how they affect market prices, returns and the allocation of resources. The fields are primarily concerned with the rationality, or lack thereof, of economic agents. Behavioral models typically integrate insights from psychology with neo-classical economic theory. Academics are divided between considering Behavioral Finance as supporting some tools of technical analysis by explaining market trends, and considering some aspects of technical analysis as behavioral biases (representativeness heuristic, self fulfilling prophecy). Behavioral analysts are mostly concerned with the effects of market decisions, but also those of public choice, another source of economic decisions with some similar biases.

If this interests you, go and read the entire article and follow the leads they gave you. It'll keep you busy with some fascinating stuff.

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