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The study of how human psychology shapes and is shaped by the systems that produce, distribute, and consume goods and services. Economics traditionally assumed rational actors maximizing utility; psychology reveals that humans are predictably irrational—loss-averse, status-conscious, prone to herding, and terrible at probability. The psychology of economical systems explains bubbles (herd behavior, overconfidence), crashes (panic, loss aversion), inequality (status seeking, positional goods), and the persistence of poverty (scarcity mindset, cognitive load). It also examines how economic systems shape psychology in return—creating desires we didn't know we had, defining success in narrow terms, making us feel like winners or losers based on arbitrary metrics.
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