Behavioral economics is a science that builds on conventional economics with insights from sociology and psychology, to better understand and predict behavior and decision making, on people´s daily lives.
Contrary to what traditional economic theory pronounces, our cognitive system has limitations. This means that most of our decisions are not planned considering every single piece of information from our environment or our experiences.
It may sound shocking, but when faced with a potential decision, we are cognitively unable to simultaneously, make every single calculation required to fully distinguish between all the possible scenarios, in order to rationally compare and choose the best decision in a consistent way.
What really happens, is that our mind creates mechanisms and shortcuts like the cognitive heuristics and habits that help us simplify the decision making process. This is an efficient way to remove the cognitive burden of fully analyzing every single decision we face in our daily lives, but it can expose the decision making process to biases, emotions, trends and other contextual elements that may ultimately lead us into irrational decision making in a predictable and consistent way .
As behavioral economists and choice architects, we try to counteract these systematic irrational behaviors by identifying them and designing nudges that ultimately generate positive changes in people´s lives..