irrationality

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The sunk costs fallacy: an unlikely friend

Sunk costs are one of the first things any economics student learns about. For the uninitiated, a sunk cost is defined as ‘a cost that is already incurred and cannot be recovered’. Specifically, it is taught that any rational decision maker should not take sunk costs into account when making decisions. This might seem like …

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E-con? Economics and Irrationality

Economic models of old can’t explain why anyone would buy a lottery ticket. But using behavioural economics, we might one day be able to fully model human behaviour, writes Jesse Condie.

Behavioural economics: a primer

The rational man is known well to any classical economist, writes Philip Grossman. But his devilish counterpart, the irrational man, is uncharted territory. Enter behavioural economics.