I wrote an answer to this question on Quora. There are few things more interesting to me than the intersection of behavioral economics and startups.

An interesting new study suggests that the poor have more to think about in terms of trade-offs which costs them financially.

Fantasizing about achieving goals can make people less likely to achieve them, by sapping the energy required to do the necessary work, a study finds.

Drawing on the insights of psychology, behavioral economists have explained why we buy more stuff at $0.99 than at $1.00 (the “left-digit effect”), why we commit to gym memberships we’ll never use (“optimism bias”), and why we don’t return things we buy as often as we should (“post-purchase rationalization”). The giants of the web, from Amazon to Zynga, use similar tricks to keep us coming to their sites, playing their games, and buying their goods. In fact, that’s how they became giants in the first place. Here’s how they game us

With things like burgers and electricity, we often need a shove from behavioral economics.

Gym-Pact offers what Zhang calls motivational fees — customers agree to pay more if they miss their scheduled workouts, literally buying into a financial penalty if they don’t stick to their fitness plans. The concept arose from Zhang’s behavioral economics class at Harvard, where professor Sendhil Mullainathan taught that people are more motivated by immediate consequences than by future possibilities.