What is behavioral economics? Standard economic models assume that people are perfectly rational, e.g., they collect and analyze data correctly. Psychology studies have shown, perhaps not surprisingly, that people are not always rational. For example, they are open to information that confirms their beliefs and less open to information that runs contrary to their beliefs.
 

Thus, behavioral economics lies in the intersection between economics and psychology. It examines how behavioral biases and cognitive limitations affect our decisions, and what we can do to mitigate the effects of biases and cognitive limitations.