Economic Behaviorism

Economics assumes that individuals are rational. Therefore, individuals make decisions that maximize their benefits or utility or an arrangement that minimizes the costs. However, in real life, people make decisions that are contrary to economic model predictions.

Economic behaviorism argues that people do not always behave rationally and are influenced by emotions, prejudice and individual characteristics. However, a group is less infallible compared to individuals if the members make independent decisions (Surowiecki). On average, the effect of different traits and emotions cancel out for ordinary group decisions. Therefore, the conventional choice is rational while the individual is often irrat