Student name Professor name Course Date Standard Microeconomics versus Behavioral Economics Introduction The emergence of behavioral economics has become a bona fide sub discipline under economics as it represents the contemporary approach and a departure from the traditional economics. This sub discipline also raises several questions that are historical methodological and philosophical in nature. On the other hand the classical economics standard microeconomics is centered on the rational decision making ability of a person when confronted with insatiable preferences having limited resources. The purpose of this discussion is to understand the differences between mainstream rational economics and behavioral economics the different positions of both theories and the behavioral economics critique on the rational choice theories. This paper therefore discusses the role of behavioral economics in the reasoning and decision making process. This paper argues that behavioral economic is the better true that people don’t always act in line with their best self-interest but with the influence of other factors including fairness and mutual benefit. Conclusion Behavioral economics offers a better explanation than rational microeconomics because; it relies on cognitive psychology and not just emotions in the process of decision-making. It emphasizes on the understanding that people don’t always act in rational ways as it is the general assumption of neo-classical and classical economic theories. Behavioral economics therefore differs with rational economics based on one basic factor which is the application of psychology in explaining human behavior. Work cited Earl Peter. "Handbook Of Behavioral Economics. Vol. A 1986: Behavioral Microeconomics." Journal of Economic Psychology 8.3 (2013): 385. Makower H. and W. J. Baumol. "Economic Theory And Operations Analysis. An Introduction To The Tools Results And Reasoning Of Economic Theory.." The Economic Journal 71.284 (2014): 790. [...]
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