Behavioral Economics

Since the end of the 1970s, a wide range of psychological, economic, and sociological laboratory and field experiments proved human beings deviating from rational choices. Standard neoclassical profit maximization axioms were outlined to fail to explain how humans actually behave. Human beings were rather found to use heuristics in day-to-day decision-making. These mental shortcuts enable us to cope with information overload in a complex world. While in Europe heuristics were more likely to be seen as evolutionary-grown decision-making aids to navigate a stressful environment, foremost North American behavioral economists proposed to nudge and wink citizens to make better choices with many different applications in multiple domains. This book will (1) start with a review of the contemporary literature on human decision-making failures in Europe and North America presenting theoretical foundations and a wide range of nudges and winks developed to curb harmful consequences of humane decision-making fallibility. The book will then (2) propose how to use mental heuristics, biases, and nudges in the finance domain to profit from economic markets providing clear communication strategies for financial executives. (3) Behavioral ethics toward inclusion and the behavioral economics of diversity will be presented as most novel advancement in the field of behavioral leadership. The monograph finishes with (4) clear leadership and followership directives on nudging in the digital age with particular attention to wise usership and the most recent developments on social media online data sharing in our post-COVID-19 era.