ABSTRACT
Although the origins of what we now call behavioral economics in some ways date back to the origins of the field of economics with Adam Smith, it has only been within the past 20 years that there has been concentrated study on the human factors that influence economic decisions. If one assumes that all humans are completely rational actors that make detailed calculations about the risk or the rewards of a given decision, we often reach vastly different conclusions between the predicted behavior of an individual or group and the actual behavior resulting in a specific decision.
The recent surge of activity in this field has been largely influenced by two economists, Daniel Kahneman and Amos Tversky. It is a bit of a curiosity that this field has been named behavioral economics, since it seems that the understandings that have been gained through this research are as much a product of our understanding of behavioral science as our understanding of economics. This chapter attempts to describe some of the basic concepts in this new and rapidly expanding field of behavioral economics, in particular the Allais paradox, nudge theory, and bounded rationality, but more to the point to try to analyze what is now understood in this regard in the context of perceptions, decisions, and actions in the realm of cybersecurity. Thus, we feel that more research in this area will lead to broader understandings of how decisions are made in attack/defense scenarios.
