THE CONSIDERATION AND EVALUATION OF INDIVIDUAL AND COLLECTIVE HUMAN BEHAVIOR WITHIN BEHAVIORAL ECONOMICS INCORPORATING PSYCHOLOGY, SOCIAL PSYCHOLOGY, NEUROECONOMICS, AND ECONOMICS TO EXPLAIN ECONOMIC DECISION-MAKING SITUATIONS

Abstract

This paper shows which factors play a central role in the subjective valuation of possessions.It relates these to a specific behavior that individuals exhibit in decision-making situations in which only limited information is available and a high degree of complexity prevails.Behavioral economics uses these findings as an opportunity to relativize the image of the rational utility maximizer, also known as homo oeconomicus, and to take greater account of psychological and social-psychological factors within economic considerations.Furthermore, the connection between Prospect Theory and the systematic distortions of perception will be shown.Prospect Theory states that decisions are not made on rational grounds alone.One of the so-called systematic perception distortions is the endowment effect.This describes that a good, which one already has in possession, is considered to be more valuable than if one did not have the corresponding good in possession.Furthermore, perception distortions such as the status quo preference and loss aversion are described.

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