Suppose an individual has to make a decision at time t without having all the information relevant for making the decision.At time (t+1), the relevant information is revealed.We will say that the individual made a mistake if his decision in time t would have been different had he known what he knows at time (t+1).True or False: Without behavioral economics, we would not be able to explain mistakes.

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Quizplus · Accepted Answer

Behavioral economics is not the only way to explain mistakes. Other fields such as psychology, decision theory, and cognitive science also offer explanations for why individuals may make mistakes in decision-making.

Suppose an Individual Has to Make a Decision at Time