Abstract
This chapter provides an overview of the economy's behavioural influence. It attempts to understand why individuals make irrational decisions in the market. It will cover both the psychological and economic aspects of behavioural economics. The psychological aspect will cover the heuristics and cognitive biases, understanding why people make errors in their decisions. Social preferences and social norms will focus on understanding the theory of fairness, reciprocity, and cooperation in the context of ultimatum games, dictator games and the trust game, concentrating on the individuals' response towards other people. Along with the psychological aspect, we will learn the theories different psychologists and economists implement. To understand the individual's behaviour in the economy and the market, various applications, and case studies will be mentioned.
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