What are the basic differences between behavior economics and traditional economic theory about consumer behavior?

Behavioral economics incorporates psychological insights into human behavior to explain why consumers often make irrational decisions, deviating from the predictions of traditional economic theory. While traditional economics assumes that consumers are fully rational and always seek to maximize utility, behavioral economics recognizes that emotions, cognitive biases, and social influences can significantly impact decision-making. This field examines phenomena such as loss aversion, mental accounting, and framing effects, which traditional models often overlook. Ultimately, behavioral economics provides a more nuanced understanding of consumer behavior by acknowledging the complexities of human psychology.