Which statement is incorrect, with regards to behavioural economics theories?

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BlackTom AI · Accepted Answer

Question restatement: Which statement is incorrect, with regards to behavioural economics theories?
Option a: 'Behavioural economics theories assume human beings are rational and have accurate information in order to weigh the costs and benefits of decisions.' This is the hallmark misconception that behavioural economics challenges; in fact, behavioural economics recognizes that people often have bounded rationality, use heuristics, and operate with imperfect information, leading to systematic deviations from pure rational cost-benefit calculations.
Option b: 'Behavioural economics theories are based around the assumption that human beings are motivated by psychological, social and emotional factors.' This reflects a core principle of behavioural economics, which expands beyond cold rationality to include motivations like social norms, emotions, and cognitive biases that shape choices.
Option c: 'Behavioural economics theories acknowledge that human beings do not always behave in a rational way when making decisions.' This statement is accurate and central to the field; it explicitly acknowledges deviations from rational choice models due to heuristics, biases, and context.
Option d: 'Behavioural economics theories are used by governments and firms to try to influence people’s behaviour.' This is true in practice; policymakers and organizations apply behavioural insights (e.g., nudges) to guide decisions in areas like health, savings, and energy use.
In summary, option a asserts rationality and perfect information as the basis for behavioural economics, which contradicts the fundamental premise of the field; the other options align with established concepts and applications of behavioural economics.

Which statement is incorrect, with regards to behavioural economics theories?

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