The Essence, Meaning, Role, and Prospects of Behavioral Economy Development

Abstract

This article explores the essence, development, and future prospects of behavioral economics, emphasizing its critical role in explaining modern economic phenomena that traditional models fail to capture. While classical economic theories often assume rational agents, a significant knowledge gap exists in understanding how psychological, emotional, and social factors shape real-world economic decisions. Using logical analysis, literature review, and observation-based empirical methods, this study investigates key concepts such as risk aversion, libertarian paternalism, fairness, and self-control models. The findings reveal that behavioral economics provides powerful tools for understanding deviations from rational behavior, particularly in consumer choices, financial decision-making, and policy impacts. The results highlight how interdisciplinary integration of psychology and economics enables more accurate predictions of individual and collective behavior, offering fresh perspectives for designing effective economic policies. The implications suggest that further advancing behavioral economics can help improve decision-making strategies, refine economic models, and inform policy interventions that align more closely with human behavior, ultimately strengthening both theoretical frameworks and practical applications in the global economic landscape.