Question

what is the role of behavioral economics in the business decision-making process, what is the role of a consultant please be thorough in your answer

Answer 1

First of all you have to know that what is Behavioural Economics . A behavioural Economics relates to the behavior that means phsycology. It relates to the economic decision making process of the people i.e, individuals and institutions. There are two main important questions which are arise in it .

1. Are the assumptions of the economists related to utility or profit maximization have good analysis of behavior of real peoples.
2. Can the individuals are maximizing subjective expected utility ?

The Role of Behavioural Economics in the decision making process is that it always helps to make good optimal decisions which gives better and great satisfaction. Behavioural Economics also helps in finding the reasons that why the peoples are taking irrational decisions. Why the behaviour of the people does not follow the assumptions of economic models. Decisions that are like how much amount we need to pay for such type of thing, How much we contribute minimum for the retirement benefits. Behavioural Economics helps in decision making for taking the rational decisions. And there is alos one other field in which we can apply behavioural economics which is that behavioural finance.

The Role of Consultant is that it helps while making the predictions related to the future due to having a expertise or good knowledge in that field after that our economics used either to accept their jugdement or predictions or not. The Consultant can helps us for making our decisions effective.