Traditionally economists have based their economic predictions on the assumption that humans are super-rational creatures using the information we are given efficiently & generally making selfish decisions that work well for us as individuals Economists also assume that we're doing the very best we can possibly do
- not only for today but over our whole lifetimes too But increasingly the study of behavioural economics is revealing that our lives are not that simple Instead our decisions are complicated by our own psychology Each of us makes mistakes every day We don't always know what's best for us & even if we do we might not have the self-control to deliver on our best intentions We struggle to stay on diets to get enough exercise & to manage our money We misjudge risky situations We are prone to herding sometimes peer pressure leads us blindly to copy others around us; other times copying others helps us to learn quickly about new unfamiliar situations This Very Short Introduction explores the reasons why we make irrational decisions; how we decide quickly; why we make mistakes in risky situations; our tendency to procrastination; & how we are affected by social influences personality mood & emotions The implications of understanding the rationale for our own financial behaviour are huge Behavioural economics could help policy-makers to understand the people behind their policies enabling them to design more effective policies while at the same time we could find ourselves assaulted by increasingly savvy marketing Michelle Baddeley concludes by looking forward to see what the future of behavioural economics holds for us ABOUT THE SERIES The Very Short Introductions series from Oxford University Press contains hundreds of titles in almost every subject area These pocket-sized books are the perfect way to get ahead in a new subject quickly Our expert authors combine facts analysis perspective new ideas & enthusiasm to make interesting & challenging topics highly readable