Behavioural economics: why do people make "wrong" choices?

The textbook "economic man" calculates everything and always chooses the most beneficial path. The real-life person, on the other hand, sees a discount and buys something they do not need. Behavioural economics studies this difference.

• Its roots are in psychology. The psychologists Daniel Kahneman and Amos Tversky studied in experiments how people make decisions under uncertainty and in 1979 published their paper on prospect theory.
• The main discovery. People's decisions can systematically differ from what standard economic theory predicts. People often think in "shortcuts" (heuristics) that deviate from the rules of probability.
• 2002. Kahneman was awarded the prize in economic sciences for integrating insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty. The prize was shared with Vernon Smith, honoured for laboratory experiments.
• 2017. Richard Thaler was awarded the prize "for his contributions to behavioural economics". Among his work is the idea of mental accounting: people mentally divide money into separate "pockets".
• The "nudge". Together with the legal scholar Cass Sunstein, Thaler popularised the idea of steering people towards better decisions without coercion, by changing the choice environment.
• What it means for accountants and financiers. Customers, employees and managers are not "economic men" either. How a report, a price or a payment schedule is presented affects the decision.

The 1980s, the 2000s and today: how have the economist's tools changed? The table shows the general direction (a summary prepared by the author).

Example (prepared by the author, hypothetical figures). Shahzoda, a café owner, tried out two different notices. The first: "The price is 105 thousand soum, 5 thousand soum discount if you pay in cash". The second: "The price is 100 thousand soum, 5 thousand soum surcharge if you pay by card". In both cases a cash payment is 100 thousand and a card payment is 105 thousand soum, that is, the economic meaning is the same. But the surcharge in the second notice looks like a "loss" to people, so more people are expected to choose cash under it. Prospect theory explains this by loss aversion: people feel a loss more strongly than a gain of the same size.