Behavioral economics is that part of economics that takes the knowledge of human psychology along with knowledge of economics and its theories into account. It makes it easy for users to simplify the decision-making process and build economic models that can be easily understood.

1. Human irrationality
seems more rational
Understanding concepts of Behavioral
Economics
DESIGN HORSE

2. Think about the last time you went shopping, why
did you buy that exact pair of jeans or shirts?
What influenced your decision? Is there any pre-
set conscious or subconscious moral force in our
head?
When you ask questions like these you are
exposed to the field of behavioral economics to
identify the answers. Behavioral Economics has
been established through factual observations of
human behavior, which states that people despite
having information and resources available to
them, do not always make what neoclassical
economists call the "rational" or "optimal"
decisions.
https://brandtrust.com/blog/behavioral-economics/

3. How does it work?
Behavioral Economics draws on elements
of psychology and economics, studying how
it links to the economic decision-making
process of people and organizations. Unlike
classical economics, in which decision-
making is entirely based on cold-headed
logic, behavioral economics allows for
irrational behavior and attempts to
understand why this may be the case.

4. In simple words, it explains why an individual went for choice A, instead of choice B. Since,
humans are emotionally vulnerable and easily distracted beings, they tend to make decisions
that are not in their vested interest.
https://www.ckju.net/en/blog/nudging-better-management-how-can-behavioral-economics-benefit-workplace/31620

5. This theory states that individuals use their self-
interests to make choices that will provide them with
the greatest benefit. By weighing their options and
choosing what is best.
Rational Choice Theory
Prospect theory assumes that losses and gains are
valued differently, and thus individuals make decisions
based on identified gains instead of identified losses.
Prospect Theory
Nudge Theory
Nudge theory is mainly concerned with the design of
choices, which influence the decisions we make. It
seeks to improve understanding and management of
the 'heuristic' influences on human behavior.
3 Theories of
Behavioral Economics