Neoclassical economics and behavioral economics both recognize that people make errors in their decision making.

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Neoclassical economics assumes rational decision-making but recognizes that errors can occur due to lack of information or computational complexity. Behavioral economics, on the other hand, directly studies the impact of psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions, highlighting how they can lead to systematic errors in judgment and decision-making.

Neoclassical Economics and Behavioral Economics Both Recognize That People Make