Final answer:
Behavioral economics is a branch of economics that incorporates psychology to better understand decision-making and how emotions can influence economic behavior.
Step-by-step explanation:
Behavioral economics is a branch of economics that seeks to enrich the understanding of decision-making by integrating the insights of psychology and by investigating how given dollar amounts can mean different things to individuals depending on the situation. Traditional economists often focus solely on the stock market and other financial factors, but behavioral economists argue that people's state of mind plays a significant role in economic decision-making. For example, emotions like revenge, optimism, or loss can influence how individuals think about money and make decisions. By considering these psychological factors, behavioral economics can provide a deeper and more nuanced understanding of economic behavior.