Behavioural Economics - An Introduction

Behavioral Economics is a emerging field which draws a lot of attention. This is a social science which is a combination fields of Economics and Psychology.Comprehensive research on this has been conducted first by Daniel Kahneman and Amos Tversky.
Behavioral Economics basically question the fundamental assumptions of Traditional economics they are :
1. Markets are efficient.
2. Human being make a rational decisions.
The fundamental assumptions of Behavioral Economics are quite opposite. They are :
1. Markets are inefficient.
2. Human being behave irrationally.
These irrational behaviour in our recent memory is 2008 recession and dotcom bust, where investors invested into shares without considering their Valuation.
One of the important concept in Behavioral Economics is 'Prospect Theory' which says

A theory that people value gains and losses differently and, as such, will base decisions on perceived gains rather than perceived losses. Thus, if a person were given two equal choices, one expressed in terms of possible gains and the other in possible losses, people would choose the former. 

Also known as "loss-aversion theory."
Behavioral Economics tend to explain why under a circumstance why an individual or company makes a particular choice.