| Economics and psychology are both sciences that have the common goal of studying human behaviour. These two disciplines have a close relationship. However, the concept that psychology is an integral part of economics was not considered by mainstream economists in the first half of the twentieth century. However, many scholars found that some anomalies that occur in economic life cannot be explained by conventional economic theories. Because of this, the emergence of behavioural economics provides realistic psychological foundations to enhance the explanatory power of economics. Behavioural economics is a growing discipline that combines economics with psychology. This discipline has been successfully applied to many areas, such as macroeconomics, labor economics, finance and marketing in the recent past.; This thesis first introduces the development of behavioural economics and reviews three basic themes: Heuristics and Biases, Prospect Theory, Reference Dependence and Loss Aversion, and then explores how these three basic ideas of behavioural economics, especially prospect theory, can be applied to the firms' decisions in marketing. The purpose of the thesis is to draw the attention of economists to this new field and encourage scholars and marketers to better understand behavioural economics and apply its tools in research. |
