Behavioural Economics
Behavioural economics recognises that people do not always act rationally. Cognitive biases, emotions, social influences, and bounded rationality affect decisions in ways standard economics ignores.
Real World
The UK government uses auto-enrolment into workplace pensions, exploiting default bias — since 2012 opt-out rates have stayed below 10%, dramatically boosting retirement savings compared to the old opt-in system.
Exam Focus
Name specific biases (anchoring, loss aversion) and link each to a policy tool like nudging or default options.
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