Abstract
Q e relatively new school of thought - behavioral economics is complementary to the neoclassical model of decision making, as it accounts for psychological factors underlying people's choices, which are omitted by standard models. Several cognitive tendencies have been identi! ed. Q ese ! ndings may be used by policy makers as tools of furthering desirable behavior of individuals. Such regulation may take the form of either soft or more heavy-handed paternalism. However its implementation raises some criticisms, ranging from practical issues to more fundamental questions of re- specting freedom of choice. Q e presented paper compares the ways in which decisions and choices are addressed in neoclassical and behavioral economics and implications of their assumptions and !for policy measures that may be taken by the gov- ernment. Controversies elicited by paternalistic approaches have also been elaborated.
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