The fundamental assumption for understanding interpretation using 'behavioural economics' is:
A)that individuals anticipate events with respect to deviations from a reference theory
B)that individuals evaluate outcomes with respect to deviations from a reference point
C)that individuals generate reasons to explain deviations from a reference norm
D)that individuals espouse theories with regard for deviations from a reference prospect

Question

Quizplus · Accepted Answer

The fundamental assumption for understanding interpretation using behavioural economics is that individuals evaluate outcomes with respect to deviations from a reference point. This is known as reference dependence, where individuals have a preference for gains and losses relative to a reference point (such as an initial endowment or a previous outcome) rather than just the absolute value of the outcome. This assumption is key to understanding aspects of decision-making such as risk aversion and loss aversion.

The Fundamental Assumption for Understanding Interpretation Using 'Behavioural Economics' Is