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Market failure

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Question and answer: International trade and protectionism

How to stop people from overspending?

The use of default rules

Why are some people irrational when using credit cards? How can those people be helped by UK institutions? How can they help themselves? The critical aspect in this debate is rationality and in this article Kat Werner-Masters explains this notion, showing why people might not be as rational as standard economics would like them to be when shopping

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behavioural economics, default rules, nudges, overspending, rationality

In economics, rationality has a very particular definition. It describes a number of rules that guide a person’s decision making. Although these rules might seem common-sense, a closer look reveals that applying them when making choices might be more complicated than initially thought. The level of complexity increases even more with the number of options available.

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Previous

Market failure

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Question and answer: International trade and protectionism

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