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Why you are not always rational with your credit card. Neoclassical economics is built on the assumption that humans are rational beings who have a clear idea of their best interests and strive to extract maximum benefit (or “utility”, in economist-speak) from any situation. In this account, price is a signal that helps you decide the combination of work, spending and saving that suits you best. Neoclassical economics assumes that the process of decision-making is rational. But that contradicts growing evidence that decision-making draws on the emotions—even when reason is clearly involved.
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