Behavioral Economics and Business

Slowly but surely behavioral economics is changing both the way we understand the world and the way the world works, especially the world of business. In recent years, some of the most tangible changes have been emanating from the work of the Office of Information and Regulatory Affairs (OIRA), a US government agency, and the Behavioral Insights Team (BIT), a branch of the UK government. Both bodies are charged with applying ideas from behavioral economics to public policy. But, behavioral ideas apply to business as well as public policy. This chapter describes some of the foundation concepts in behavioral economics, and their application to business decision making and to business education, as well as to public policy.