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Behavioral economics is a branch of economics that studies what factors influence people’s purchasing decisions.
Traditional economics assumes that people, i.e. economists, make rational decisions. However, behavioral economics carefully studies the factors of consumer behavior, noting that our behavior is extremely far from rational and unpredictable.
Do you know that…
The theory of bounded rationality is one of the theories of behavioral economics that says that people make decisions based on limited information, time and resources.
Prospect theory is another theory in this field of science, which says that consumers tend to avoid losses, and they give a higher value to losses than to profits.
How to use behavioral economics when running your own business?
Companies use behavioral economics research to understand what factors influence consumer decisions and what marketing strategies are most effective.
Therefore, knowledge of this theory and its practices gives the opportunity to develop appropriate marketing strategies to the needs and desires of consumers.
In addition, consumer psychology, which you can read about here, in-depth study of purchasing decisions and analyzing how advertising and marketing strategies affect consumer choices can contribute to understanding the basis of consumer choices and behavior.
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