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The History of Behavioral Economics: Merging Economics and Psychology
The evolving study of behavioral economics, becomes ever more important in the developing market system of our society and demonstrates, how so many new insights can be gained through the collaborative work of two completely opposing disciplines with the same goal, to understand a humans interaction, one from a humanity point of view and an opposing sciences point of view. The study of behavioral economics is a domain of application that lies at the intersection between economics and psychology. It involves adding the insights of Psychology, in the aspects of empirical research on human cognition and emotional biases, to the rational economic models, in order to predict economic decisions made in the market system of our society. In around 1979, the two psychologists Kahneman and Tversky proposed the first substantial idea of behavioral economics, until the date the investigation around this field of knowledge is ongoing, therefore, unresolved. However, there are many developing sub-theories in the study of behavioral economics. The main two compartments, which both were developed from the beginning of the discipline, are the rational choice theory and prospect theory.

The rational choice theory holds, as one of the pillars of behavioral economics, the assumption that humans know exactly what they are looking for and will strive to maximise their utility. It is more seen as the beginning of the merging of the two disciplines, as it was first applied to the discipline of sociology to give classical economists an idea of its concepts and application. The opposite flow of thinking, is discussed by the prospect theory of Kahneman and Tversky. They published the idea of human nature, which led them to the explanation that the decisions made are not always optimal. This came from their investigation about risk taking decisions, by which the outcome explained that different type of problems human nature faces will inevitably lead to different type of decisions made.

Economics and Psychology as disciplines create
Economics only exists as the discipline it is, since the late 19th century, when it was renamed. Firstly, economics has different directions, such as the neoclassical view, which sees economics as the creation, consumption and administration of wealth. Thus, a second direction focuses more on the macro aspect of economics, therefore, put the main focus onto price and wage rigidity. Psychology, on the other hand, is split into different pillars, however, as a generic guideline, it is concerned with the scientific study of a humans mind and behaviour. It pillars differ in its approaches to the economists approach to the world, as the discipline investigates the fields of biology, sociology and culture through the lens of theoretical and empirical research.

Behavioral Economics: Interdisciplinary Approach
Until the date, both disciplines still exist as an individual approach, but the interdisciplinary approach of behavioral economics has become a significant part of both disciplines and by itself. The debate of economists and psychologists about the beginnings of the developing discipline and the actual area of knowledge (AOK) is still ongoing, however, with Richard Thaler having developed several theories and underlining statements, how both disciplines can provide different approaches to create new and valid insights. Thaler developed the ideas and theories of Kahneman and Tversky, leading up to the foundations of the Endowment effect, which was first used in the sociocultural approach in psychology but is now a permanent segment in economics.

Thaler first gathered facts and evidence against the efficient market theory, and with the help of Ernst Fehr, they showed that human behaviour is actually much more thoughtful that homo economics states. The endowment effect, which explains why people place a higher value on a good if they own it than they do if they are considering purchasing it, is fundamental to understand the introduction to the field of behavioral economics. Richard Thaler brought forward one more major important theory. In his research about the nudge theory he argues, that in a free market, we can find any form of nudges, which can alter humans behaviour predictably, without removing any alternative options or changing their economic preferences. Such nudges could be limited information, mental accounting, choice overload or the psychology of price, with the implications of those sub-theories, the foundations of behavioral economics as a discipline were formed and created a base for other social economists to continue the research.