Economics AQA A Level Year 2 Micro -
Unit 1 Behavioural Economics Updated
Altruism - ANSWER-occurs when economic agents help others at their own expense
and believe in fairness in society
Anchoring - ANSWER-a cognitive bias describing the human tendency when making
decisions to rely too heavily on the first piece of information offered
Asymmetric Information - ANSWER-when one party to a market transaction possesses
less information relevant to the exchange than the other
Availability Bias - ANSWER-occurs when individuals make judgements about the
likelihood of future events according to how easy it is to recall examples of similar
events
Behavioural Economics - ANSWER-a method of economic analysis that applies
psychological insights into human behaviour to explain how individuals make choices
and decisions
Bounded Rationality - ANSWER-when making decisions, an individuals rationality is
limited by the information they have, the limitations of their minds, and the finite amount
of time available in which to make decisions
Bounded Self-control - ANSWER-limited self-control in which individuals lack the self-
control to act in what they see as their self-interest
Choice Architecture - ANSWER-the design of ways in which choices can be presented
to economic agents, and the impact of that presentation on their decision making
Cognitive Bias - ANSWER-a mistake in reasoning or in some other mental thought
process occurring as a result of, for example using rules-of-thumb or holding onto one's
preferences and beliefs, regardless of contrary information
Computation - ANSWER-the ability to make correct decisions based on the information
available
Default Choice - ANSWER-an option that is selected automatically unless an alternative
is specified
Diminishing Marginal Utility - ANSWER-for a single consumer the marginal utility
derived from a good or service diminishes for each additional unit consumed
Framing - ANSWER-the actual way in which choices are presented
Unit 1 Behavioural Economics Updated
Altruism - ANSWER-occurs when economic agents help others at their own expense
and believe in fairness in society
Anchoring - ANSWER-a cognitive bias describing the human tendency when making
decisions to rely too heavily on the first piece of information offered
Asymmetric Information - ANSWER-when one party to a market transaction possesses
less information relevant to the exchange than the other
Availability Bias - ANSWER-occurs when individuals make judgements about the
likelihood of future events according to how easy it is to recall examples of similar
events
Behavioural Economics - ANSWER-a method of economic analysis that applies
psychological insights into human behaviour to explain how individuals make choices
and decisions
Bounded Rationality - ANSWER-when making decisions, an individuals rationality is
limited by the information they have, the limitations of their minds, and the finite amount
of time available in which to make decisions
Bounded Self-control - ANSWER-limited self-control in which individuals lack the self-
control to act in what they see as their self-interest
Choice Architecture - ANSWER-the design of ways in which choices can be presented
to economic agents, and the impact of that presentation on their decision making
Cognitive Bias - ANSWER-a mistake in reasoning or in some other mental thought
process occurring as a result of, for example using rules-of-thumb or holding onto one's
preferences and beliefs, regardless of contrary information
Computation - ANSWER-the ability to make correct decisions based on the information
available
Default Choice - ANSWER-an option that is selected automatically unless an alternative
is specified
Diminishing Marginal Utility - ANSWER-for a single consumer the marginal utility
derived from a good or service diminishes for each additional unit consumed
Framing - ANSWER-the actual way in which choices are presented
