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3.2.5 Heuristics, biases and behavioural economics

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One field of psychology that has been applied by security researchers since the mid-2000s has been decision science, which sits at the boundary of psychology and economics and studies the heuristics that people use, and the biases that influence them, when making decisions. It is also known as behavioural economics, as it examines the ways in which people's decision processes depart from the rational behaviour modeled by economists. An early pioneer was Herb Simon – both an early computer scientist and a Nobel-prizewinning economist – who noted that classical rationality meant doing whatever maximizes your expected utility regardless of how hard that choice is to compute. So how would people behave in a realistic world of bounded rationality? The real limits to human rationality have been explored extensively in the years since, and Daniel Kahneman won the Nobel prize in economics in 2002 for his major contributions to this field (along with the late Amos Tversky) [1006].

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