Behavioural economics - Economics Online

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Behavioural economics

A collection of 212 posts

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Behavioural economics

What Is a Financial Plan and Why Is Financial Planning Important for Your Future?

Why Having a Financial Plan Matters Earning a good income doesn't automatically mean you have a clear financial direction. People can save, invest, pay down debt, and contribute to retirement accounts without necessarily having these pieces working toward the same objectives. So, what is a financial plan, and

Overhead view of a person working at a laptop showing a budget spreadsheet, with a calculator, receipts and a notebook on the desk

Behavioural economics

The Economics of the Household: Time, Unpaid Work and the Family Budget

The principles of microeconomics, such as scarcity, opportunity cost and specialisation, apply to the economist's analysis of the way people make decisions regarding activities within their homes, for example, the division of time between paid employment, housework and leisure; allocation of limited income among competing needs, which a

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Behavioural economics

Business Ethics in Economics: Why It Matters for Firms

What Is Business Ethics In Economics? In economics, business ethics is treated not as a moral add-on but as part of a firm's incentive structure. Economists do not perceive business ethics as solely the ethical side of the decision-making process within a business entity; instead, they consider business

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How Technology Is Lowering Barriers to Participation in Cryptocurrency Markets

Introduction Previously, only those who were experienced traders or had a lot of knowledge about technology could trade in crypto-currencies. But because of technological advancements, purchasing, selling, storing, transferring and using digital assets has become easier on different devices and through different providers than before. New technology has lowered many

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Behavioural economics

Dynamic Efficiency in Markets: How Crypto Is Rewiring Financial Tools

Crypto’s inclusion in tools like TradingView shows dynamic efficiency as markets adapt to evolving tech and investor demand.

Data as Club Good: Excludability, Externalities, and Governance

Behavioural economics

Data as Club Good: Excludability, Externalities, and Governance

Data act as club goods: non-rival but excludable, with governance reducing externalities and boosting productivity.

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Behavioural economics

Debt Sustainability and Intertemporal Budget Constraints: Development Traps in Belt and Road Financing

BRI loans test intertemporal budget constraints, risking debt traps when growth and tradable returns fall short.

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Behavioural economics

Credit Rationing and Information Asymmetry: The Economics Behind Online Micro-Loans

Credit rationing and asymmetric info explain why high-risk micro-loans exist and carry high rates.

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Behavioural economics

Incomplete Contracts and Complex Requirements: Contract Theory and the Persistence of Bespoke Website Design Services

Incomplete contracts explain why bespoke website design services thrive amid evolving, complex digital needs.

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Behavioural economics

Comparative Advantage and Specialization in Execution: Ricardo’s Law Applied to SaaS Development

Comparative advantage explains why SaaS founders outsource execution to specialists who lower costs, risk, and time to market.

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Behavioural economics

Bounded Rationality and Behavioral Frictions: Why Simple Digital Tools Outcompete “Built-In” Features

Bounded rationality explains why users choose simple tools like ROI calculators over complex built-in features.

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Behavioural economics

The Hidden Economics of Getting Divorced: What Florida Residents Actually Pay

I've spent years looking at how people make financial decisions under pressure, and divorce might be one of the least rational markets out there. You're emotionally drained, probably not sleeping well, and then you're supposed to make smart choices about thousands of dollars in

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Behavioural economics

Is Private Travel Becoming a Rational Economic Choice, Not Just a Luxury?

Gary Becker's 1965 paper, A Theory of the Allocation of Time, argued that the cost of time should be considered alongside the cost of market goods, treating time as an important economic resource. Becker's idea was that each minute of flying time represents an opportunity cost

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Behavioural economics

Information Asymmetry Between Consumers and Digital Advertisers

When George Akerlof wrote the essay, "The Market for Lemons," he would never have envisioned that digital commerce in the twenty-first century would be characterised by massive proportions of asymmetric information between corporations and online advertisers. With regard to the relationship between advertisers and consumers, one party is

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Behavioural economics

What Unresolved Account Activity Means for a Personal Budget

Households make spending decisions based not only on how much income they receive, but also on how certain they are about the resources available to them. Consumption smoothing theory explains why individuals attempt to maintain stable consumption over time by adjusting their savings, borrowing, and asset holdings in response to

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Behavioural economics

Why are gaming skins so expensive? It's the Veblen good effect

According to a recent GWI survey on gaming monetization trends, the average American gamer spends about $18.60 a month on in-game purchases, with the majority of those purchases providing no advantage to players in terms of winning (in-game) whatsoever. The usage of skins in video games is similar to

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operational-efficiency

Moral hazard costs the average firm about 5% of revenue a year — and governance software is how it fights back

The same dynamic plays out inside ordinary organisations. The Association of Certified Fraud Examiners estimates that companies lose roughly 5% of their annual revenue to occupational fraud. Employees are often able to take risks or bend rules because the costs are borne by the organisation rather than by the individual

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Behavioural economics

Why the income effect keeps Americans buying jewellery as real incomes stall

The income effect helps to explain why Americans are still buying jewellery for themselves rather than waiting to receive it as a gift, even as real disposable income growth has slowed (1.9% year-on-year through August 2025). In fact, 80% of adult Americans said that they had purchased jewellery for

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Behavioural economics

Lab-grown diamonds are draining the signalling power from the engagement ring

Couples today have more choices than ever when purchasing an engagement ring, largely because of the rapid rise of lab-grown diamonds. While mined diamonds have traditionally symbolized commitment and romance, lab-grown alternatives are reshaping how couples think about both the financial and symbolic value of engagement rings. According to The

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Behavioural economics

The Economics of Executive Tables: Signalling Theory, Status Goods, and Corporate Identity

While simple on the surface, executive tables represent an economic asset with much greater value than their immediate physical utility. In essence, a modern executive table is just a working surface—a place to store papers and files and organise stationery. However, many high-end executive desks can be priced well

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Behavioural economics

Understanding Hyperbolic Discounting and Spending Habits During the Holidays

Each holiday season, millions of people go over the budget they'd set for themselves, often regretting their actions after the fact. They make large purchases rapidly and then feel remorseful about what they did. The reason isn't that these consumers are undisciplined; seasonal marketing strategically exploits

Behavioural economics

Password Security Economics and Risk Aversion

It is estimated that over $200 billion will be spent this year on worldwide cybersecurity tools; however, one of the most important forces driving the growth of this industry has not been fully explored via economic theory. Risk aversion, or the fact that individuals (and businesses) generally value the avoidance

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Behavioural economics

Information Asymmetry and the Rise of Expat-Focused Real Estate Brokerages

Expat brokerages thrive by reducing information asymmetry, guiding foreign buyers to secure good properties abroad.

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Business economics

Information Economics and Signaling: Why Referral Marketing Works in Markets with Imperfect Information

In university economics, one of the most powerful concepts taught is that of information economics, or the study of how markets operate when buyers and sellers have varying degrees of information about one another and their products. A related concept is signaling theory, developed by Michael Spence, which provides a

Child sitting in front of a computer with headphones on, with a pen in hand, looking at a laptop, engaging in online learning.

Behavioural economics

Economies of Scale and the Growth of Online K–12 Learning Platforms

Online K–12 platforms lower average education costs by scaling digital lessons across large student populations.