Behavioral economics applies principles of psychology to economic theory, helping economists bridge the gap between behavior predicted by economic theory and that observed empirically. It relaxes the strict adherence to particular assumptions typically made within the confines of economic theory such as that people make rational decisions with full information in their own best interests. Rather, it acknowledges that behavior can and is influenced by other factors. We will discuss these factors, including cognitive biases, social and cultural factors, heuristics, and emotions. Using behavioral economics, we can better understand and predict behavior, which facilitates guiding individuals, organizations, and firms towards better choices, however defined.

Cheryl Wachenheim is a Professor in the Department of Agribusiness and Applied Economics at North Dakota State University. She holds an undergraduate degree in animal sciences from the University of Minnesota, and masters and doctorate degrees in Agricultural Economics and an MBA from Michigan State University. She adores teaching and currently teaches introductory economics, agricultural finance, agricultural sales, and agribusiness strategy, and advises both undergraduate and graduate students. Her research focuses on farm and agribusiness firm decision-making with a recent focus on adoption of precision agricultural technologies, participation in conservation programs and adoption and conservation practices, and the use of behavioral economics to understand and influence decision-making.