Behavioral economics is the study of psychological, cognitive, emotional, cultural and social factors on the decisions of individuals and institutions.

Classical economic theory assumes that people are rational actors who make decisions based on their preferences. Behavioral economists argue that this view ignores human biases towards overconfidence and risk aversion.

Overconfidence can lead to excessive risk taking in financial markets while loss aversion leads consumers to avoid risks even when they have a positive expected value.

Cultural norms can also influence decision making as well as emotions such as fear or anger which may cause people to act irrationally.

You should be aware of your own biases so you don't fall prey to them when making important financial decisions.

Public choice theory argues that politicians often pursue policies for self-interest rather than the good of society at large. This can lead to inefficient outcomes or even corruption if unchecked by other forces such as transparency laws or strong civil society organizations .

It may be politically costly for politicians to implement policies designed to reduce voter ignorance because voters tend not support these types of reforms .

Many governments fail at implementing effective anti-corruption measures because they lack sufficient political will and capacity .

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