Behavioral Biases
Critique of the Maximizing Behaviour of Consumers and Producers
AO3·HL
Syllabus requirement
Rule of thumb, anchoring and framing, availability bias—how cognitive shortcuts influence decision-making.
Assessment objectives
AO3 Synthesis and Evaluation
Higher LevelThis topic is assessed at HL.
Summary
This topic explains behavioural economics: how real people often deviate from the fully rational decision-maker assumed in traditional models because of cognitive limitations and biases. It describes common biases — rule of thumb, anchoring, framing and availability — and shows how these mental shortcuts and presentation effects can change consumer choices, willingness to pay and probability judgements. Understanding these biases helps explain observed differences between predicted and actual consumer behaviour.