Behave-conomics, aka, Behavioural Economics, is the offspring of economics and psychology. Richard Thaler, the cool godfather of Behavioural Economics, says it's just "economics with injections of good psychology and other social sciences" (Thaler 2015).

To simplify it for you, traditional economics believes that humans are rational and always make the best decisions (like a super-smart robot), but Behavioural Economics says, "Hold on! Humans aren't always rational and they make mistakes!" This field digs into the messier side of human decision-making and explores why we don't always go for the optimal choice.

Behavioural economics reveals that our decision-making often goes off the rails due to biases. Let's explore the four most common ones.

Rules of Thumb (Heuristics): These are mental shortcuts or 'life-hacks' our brain uses to make decisions quicker. Imagine you're in a new city and want to book a hotel, chances are you'd choose a hotel whose name you recognize. It's like a comfort food for the brain, but just as comfort food isn't always healthy, relying too much on heuristics can lead us to not-so-great decisions.

Anchoring: Ever noticed how seeing a high price tag first can make other prices seem cheaper? That's anchoring. Let's say you're shopping for a house. The first house you see is super expensive. The next ones, even though still expensive, suddenly seem cheaper. It's a trick often used by salespeople. They show you a high price first so everything after feels like a bargain!

Framing: Framing is all about presentation. It's like choosing between a burger labelled '9% fat' and '91% fat-free'. Both are the same, but we feel the latter is healthier because it's framed in a positive way. The same goes for the flu vaccine example - same data, different spin!

Availability: The availability bias explains why we give more importance to the latest or most readily available information. So, after a big earthquake, people rush to buy insurance, even though the chances of another quake soon are low. Or you might think depression is more common if you've seen a lot of antidepressant ads recently.