behavioral-economics

Why emergency funds protect decisions: how liquid cash avoids forced trade-offs, what scarcity research does and does not show, and what Fed data say.

Stock market crashes are not random events. They follow a mechanical sequence: valuations stretch on borrowed money, a trigger breaks confidence, and forced selling feeds on itself until buyers disappear.

The psychology of decision making explained: prospect theory, loss aversion, the paradox of choice, heuristics, and why human decisions deviate systematically from rationality.

In 1981, Tversky and Kahneman showed that identical outcomes produce opposite choices depending on wording. The Asian disease problem revealed how framing drives decisions — not logic.

In 1982, Werner Güth's ultimatum game showed people routinely reject money to punish unfairness. Here's the experiment, the cross-cultural results, and what it means for economics and AI.

Classical economics assumed humans make rational decisions that maximize their self-interest. Then Daniel Kahneman and Amos Tversky spent decades documenting where that fails, and in which direction. Their work changed how governments design policies, how companies sell products, and how researchers think about money.

Classical economics assumed humans make rational decisions. Behavioral science spent 50 years proving that assumption spectacularly wrong.