Biases in decision making: rules of thumb, anchoring, availability and social norms
People do not always make perfectly logical decisions. Instead, mental shortcuts and outside influences push their choices in predictable, often irrational directions.
Real World
When Amazon displays a crossed-out 'was £89.99' beside a current price of £49.99, shoppers anchor to the higher figure — even if the item was never genuinely sold at that price — and perceive a bargain.
Exam Focus
For a 'discuss' question on biases, apply each bias with a named example and always consider whether the bias leads to market failure.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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