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MODULE 2

Behavioural Economics and Human

Factors in Decision-making

The Global Financial Crisis, and the emergence of ‘behavioural economics’ challenged
classical and neo-classical economic theory as a field started, partly as a way for people
to understand how the ‘economics’ could have gone so wrong! Behavioural economics
layers psychology over economic theory to add a human element to the rational
economic decision-making that humans undertake. Hence we will not necessarily make
the ‘best’ rational economic decision because we will have a personal bias towards a
different outcome. Behavioural economics is a fascinating theoretical area that can
shed light on a variety of practice by almost ‘excusing’ poor decisions, outcomes and
judgments on the human condition.

This module challenges you to look at how the theory of behavioural economics
impacts on you, the decisions you make, and the behaviour that occurs in your
organisation.

Behavioural economics can also help you realise why you interpreted and presented
the data in module 2 in the manner that you did. Surprisingly, therefore, this module is
quite reflective – not what you would expect from an economics module! There are
plenty of articles written about how behavioural economics is informing interpretations
in most industries so go online and search in the library for articles relIt will also
encourage you to explore your own personality preferences in relation to your decision-
making style.

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Laureate International Universities 26/6/18 13(39

This module will help you:

Critically evaluate your decision making within the realms of behavioural

economic theory

Gain insight into the human factors that influence the decision making process of
yourself and others

Question the bias behind decisions from a behavioural economic perspective

This module will cover:

Application of behavioural economic theory in decision-making practice

The human element behind economic decisions

Other human factors including biases, traps and personality preferences that
influence decision-making.

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