Behavioral economics integrates psychology with economics to understand why individuals sometimes make irrational decisions, such as purchasing health club memberships to commit to exercising. This is seen as a way to precommit and motivate oneself, acknowledging the common human tendency to procrastinate or avoid less pleasurable activities even when they have long-term benefits.

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Behavioral Economics

Question 56

Multiple Choice

Behavioral economics

A) blends insights from sociology and economics.
B) suggests that too much variety may be welfare enhancing.
C) has contributed to microeconomics but not to macroeconomics.
D) suggests that consumers purchase health club memberships instead of paying per visit in an attempt to commit themselves to an exercise regime.

Correct Answer: