Behavioral Economics studies the effects of psychological, social, cognitive, and emotional factors on the economic decisions of individuals and organization and the consequences of prices, returns, and resource allocation, of the impact of different kinds of behavior, in different environments of varying experimental values.
Microeconomics is a branch of economics that studies behavior of individuals and firms in making decisions regarding the allocation of scarce resources (time, money, facilities, and talent) and the interactions between individuals (inside and outside the firm) and firms themselves.
The goal of microeconomics is to analyze the decision-making mechanisms and their outcomes that establish relative prices (or costs) among goods and services and then to allocate these limited resources among alternative uses and the decisions made on those uses. That is, analyze the trade-space for the best decisions in the presence of uncertainty.
All project work operates in the presence of uncertainty, aleatory uncertainty, and epistemic uncertainty. These two uncertainties create risk to the success of all project endeavors. Reduction or Mitigation of these risks, generated by these uncertainties, is the role of risk management.
Risk Management is How Adults Manage Projects - Tim Lister
In the presence of these uncertainties, and the business need to make decisions for assigning scarce resources (time, money, and talent), decisions must be made with partial or even missing information. The behavioral aspects of these decisions involve individuals, organizations, processes, procedures, and governance principles interacting with each other to increase the probability of project success in support of the firm's business goals.
Information needed to make a credible decision in the presence of uncertainty, for choices couched in microeconomics (scarce resources), driven by psychological, social, cognitive, and emotional factors are at the core of the processes to increase the probability of project success
The Punch Line
You're NOT going to increase the probability of success in the presence of uncertainty without making estimates of the aleatory and epistemic uncertainties that create project risk.
Anyone telling you that you can make an informed and credible decision while spending other people's money without making estimates is selling you a pig in a poke.†
† Pig in a Poke is an English colloquialism meaning that something is sold or bought without the buyer knowing its true nature or value, especially when buying without inspecting the item beforehand.
