Behavioral Economics

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Advertisement with a countdown clock promotes a limited-time sale.

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Fear of Missing Out (FOMO)

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Behavioral economics is the study of how irrational factors affect economic decisions.

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The study of how irrational factors affect individual’s economic decisions.

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Guy buys concert tickets but goes despite a snowstorm because he paid for it. This is

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Sunk Cost Fallacy

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Ally values her Netflix trial due to her full account ownership.

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The Endowment Effect

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Peter chooses a conservative retirement account due to fear of loss. This reflects:

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Loss Aversion

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Paula sees friends' concert pictures and feels like an outsider.

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Fear of Missing Out (FOMO)

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Example of loss aversion:

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Deciding against selling your house below its purchase price.

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Confirmation bias is the tendency to seek information that supports our beliefs.

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The tendency to seek information that supports our beliefs.

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Lottery winners often revert to their original happiness levels after the initial excitement.

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Hedonic Adaptation

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FOMO is the anxiety that an interesting or exciting event is happening without you.

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The anxiety that an interesting or exciting event is happening without you