IB Economics — Critique of maximizing behaviour of consumers and producers

Key Idea: Topic 2.4 challenges the idea that people always act **rationally**. It introduces **behavioural economics** — biases, heuristics, and **nudge theory** that explain why real decisions differ from the rational model.

✅ Core definitions

🧠 Key cognitive biases

💡 Nudge theory

⚖️ Evaluation of nudges

Nudges work best for **low-stakes, habitual decisions** (food, savings). They are less effective for major purchases or addictive goods.