Behavioral Economics: Refers to an approach to understanding decision making and behavior that integrates behavioral science with economic principles. It goes beyond the “Homo Economicus” or the “Rational Man” that economic studies require for their theories
Bias: Refers to deviations due to misconceptions or prejudiced views from the rational choice
Halo effect: Refers to a term created by Edward Thorndike and is the tendency for positive impressions of a person, company, country, brand, or product in one area to positively influence one’s opinion or feelings of a person, company, country, brand, or product in another area
Nudge: Refers to a concept in behavioral economics that subtly alters the environment or context in which people make decisions with the main goal of influencing their behavior. Most notable mention is the book of Thaler with the same title.
Ponzi scheme: Refers to an investment fraud that pays existing investors with funds collected from new investors. It is a type of a Pyramid scheme, in which the top part is funded by the bottom. If the flow for some reason stops, the pyramid is demolished and the investors lose their money. The term has taken its name from Charles Ponzi, who duped investors in the 1920s.