Economics (McConnell), AP* Edition, 20th Edition

LO 8.1

Define behavioral economics and explain how it contrasts with neoclassical economics.

LO 8.2

Discuss the evidence for the brain being modular, computationally restricted, reliant on heuristics, and prone to various forms of cognitive error.

LO 8.3

Relate how prospect theory helps to explain many consumer behaviors, including framing effects, mental accounting, anchoring, loss aversion, and the endowment effect.

LO 8.4

Describe how time inconsistency and myopia cause people to make suboptimal long-run decisions.

LO 8.5

Define fairness and give examples of how it affects behavior in the economy and in the dictator and ultimatum games.