BEHAVIORAL ECONOMICS AND MAKING OF BUSINESS DECISIONS

The development of behavioral economics and its growing implementation had a considerable impact on the process of making business decisions. Modern management and decision-making have not been connected exclusively with mathematical models anymore for a long time. An increasing number of researches that refer to observing the business decision-making process clearly indicates that it is not influenced only and exclusively by rational considerations, but also by psychological processes, the emotional, as well as the spiritual state of the decision-maker. Man is both, a rational, and an emotional being, therefore, his decisions will not be the consequence of rational choices alone, but they will also often be directed on satisfying the need originating from the psychological world of the decision-maker. Human beings are often not aware of the external and internal factors influencing their choices, they are rationally and emotionally limited. The rational limitation is reflected in the fact that it is not possible to have absolutely all the information that led us to the best possible decision, while the emotional limitation is reflected in the fact that man often does not recognize his internal state and emotions and runs away from them even more often. It is exactly the internal and external factors that affect our thoughts, actions, and feelings and make the process of making business decisions difficult and complex.