ABSTRACT
Economists seek to understand social phenomena as the outcomes of many individuals each making their own decisions. Given a model of how individuals make decisions, economists can make theoretical predictions about the impact of changing technology, laws, or government policies on individual behaviors, and subsequently the aggregate impact of those behaviors for society. So although economists are primarily motivated by market-level concerns, since economic analysis begins at the individual level, we need a clear understanding of individual behavior. This chapter introduces the “standard” economic model of individual decision making against which behavioral economics is reacting. The assumptions and implications of the standard model are interrogated throughout the remainder of the book.
