All people face choices and decision-making situations. These differ in their complexity and implications. With simple, everyday choices we can rely on heuristic judgement. Conversely, in more complex or uncertain situations, heuristic judgement leads to biases that can bear negative long-term consequences. Behavioral economists provide solutions to biases by applying psychological insights on limited cognitive abilities. Choice architecture and nudging represent ways to guide people towards better solutions in the long run. People are deeply embedded in social dynamics and do not make decisions in a vacuum. Game theory addresses decision-making in strategic situations where the decisions of those involved are interdependent. Game theoretic models should guide rational agents toward the best outcomes for themselves. However, social dilemma games and behavioral experiments suggest that people do not always follow game theory principles in strategic situations, leading them to better solutions in the long run. Through a review of the literature and extant research on decision-making, I explore whether there are more optimal decisions for individuals and society, and how to achieve them.
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