Are you making rational economic decisions? Or are unseen forces guiding your choices? Dive into the fascinating world of behavioural economics, the field merging psychology, neuroscience, and economics to understand how people actually make decisions, not just how theories say they should. For years, economists relied on models assuming we were perfectly rational beings aiming to maximise our utility, like the mythical Homo economicus. But real-world behaviour is messier, influenced by a host of cognitive biases and mental shortcuts known as heuristics.

Discover key concepts like the availability heuristic, explaining why the easiest option often wins, whether it's choosing lunch or being swayed by repetitive advertising. Learn about anchoring, the way initial information, like a first price offered or a suggested donation amount, can disproportionately influence negotiations and purchasing decisions. Understand representativeness, our tendency to rely on stereotypes or vivid stories rather than statistical facts when judging probabilities – remember the 'Linda problem'?Explore the powerful impact of loss aversion, the observed human tendency to feel the pain of a loss more strongly than the pleasure of an equivalent gain. This bias is crucial in framing financial decisions, marketing promotions ("limited time only!"), and even influencing political campaigns like the Brexit referendum, which also leveraged status quo bias, our preference for keeping things as they are. We'll also touch upon optimism bias, a common trait where we are overly confident about positive outcomes, sometimes leading forecasters astray.

This field, pioneered by psychologists like Kahneman and Tversky, challenges the traditional view, showing how factors like context, emotions, and even how information is framed drastically alter our choices. We'll look at how nudging – subtle changes in the "choice architecture" – can influence behaviour, used by governments for public policy (like encouraging tax payments or healthy eating) and by companies in marketing and retail layouts.

We'll also explore the 'dark side', how these insights can be weaponised for manipulation, from targeted political advertising (recalling Cambridge Analytica's use of personality traits and emotional triggers) to exploiting investor biases in financial markets. Hear about the concept of behavioural finance and how understanding phenomena like herding behaviour and the psychology of bubbles can help explain market instability, contrasting with the long-held belief in efficient markets where prices always reflect intrinsic value.

While behavioural economics offers powerful insights and has gained mainstream acceptance, it's not without its critics and limitations, particularly when trying to tackle large-scale, complex issues like pandemics or climate change. Join us as we unpack how this "hot science" reveals the fascinating, sometimes irrational, ways our brains interact with the economic world around us.