Behavioral economics is the study of the effects of psychology on economic decision-making. This is usually what people think and feel when they spend money on a given good or service. The great economist Adam Smith was the first proponent of this idea through his book “The Theory of Moral Sentiments” which dates back to 1759. However, it took more than 100 years to understand more clearly the important role of the psychology of feelings. a buyer plays in economics. In behavioral economics, there are seven basic principles that all contribute to the decision-making process. Behavioral economics can explain how people will respond to different situations, such as when there are no economic problems and when there is economic adversity within society or at home. In this context, the emotional decision must be taken more seriously when trying to consider different economic flows. Consumer behavior, which is part of behavioral economics and of course an important part of buyer behavior, is the study of the six Ws which are who, what, when, why, where and how. It integrates features from psychology, marketing and economics. Consumer behavior attempts to understand the buyer's decision-making process and how demographics, influences from family and friends, and changes in behavior can change the buyer's decision regarding a good or service given. First, heuristics apply to experience-based techniques that are used for problem solving, discovery and of course learning. Heuristic methods are used to speed up the procedure of finding an acceptable answer; One of the most well-known heuristics is the “rule of thumb.” This means that most people's decisions are based on how easily...... middle of paper ....../arstechnica.com/science/news/2010/10/envy-stimulates-the -economyand-is-why-you-bought-your-iphone.ars [Accessed December 3, 2011]• Plous, S., (1993). The psychology of judgment and decision-making.• Poundstone, W., March 19, 2010, “The Hidden Psychology of Menu Design.” Wired.co.uk [Online] available at: http://www.wired.co.uk/magazine/archive/2010/04/start/the-hidden-psychology-of-menu-design [Accessed December 2 2011] • Tversky, A., Kahneman, D. (1981). “The framing of decisions and the psychology of choice”. Science 211 (4481): 453-458 • Welch, N., February 2010, “Marketing's Guide to Behavioral Economics”. McKinsey Quarterly [Online] available at: http://www.mckinsey quarterly.com/A_marketers_guide_to_behavioral_nomics_2536 [Accessed 3 December 2011]• Wilkinson, N (2010), Introduction to Behavioral Economics, Basingstoke: Palgrave-MacMillan