The majority of what is taught in Principles of Economics courses, both macro and micro, reflects what should properly be called "Neo-classical" economics. Despite the imperial claims of neo-classical economists, it is not the only game in town. Neo-classical economists like to claim that they practice "positive economics". By positive economics, they mean that the models and theories created are value-free and simply scientific attempts to create models that predict actual human behavior. In practice however, all neo-classical models start with the assumption that humans, all humans, make rational, optimizing decisions. Examples of this are the textbook examples of profit-maximizing firms and utility-maximizing consumers.

An alternative to the neo-classical economic approach is Behavioral Economics. Behavioral economics starts by collecting empirical, factual evidence of actual human behavior. Then the behavioral economist attempts to construct models or theories that explain or predict that behavior in more general circumstances. Behavioral economics collects data from both observations of normal economic activity (such as employment data or sales data) and from economic experiments. In this way, behavioral economics shares much with sociology and market reserch.

Consider the following as an example of how the two approaches differ. Suppose a couple goes to a restaurant. They decide to order a bottle of wine. The restaurant has essentially two types of wine available: $10 bottles and $25 bottles. These two aren’t real wine connoisseurs, so they economize and choose the $10 bottle. Now consider an alternative scenario: suppose they were to go to the restaurant and instead of two prices on wine, the restaurant has 3 bottles: the same $10 and $25 bottles. bit in addition they now offer a high-end $100 bottle. Repeated economic experiments and also market research indicates that now the couple would most likely order the $25 bottle. Neo-classical economics assumes this won’t happen – if the $10 bottle was the right choice (rational choice) the first time, then adding another more expensive choice shouldn’t change anything. But experience says it does. Why? Because people are not rational maximizers in the real world.

For an easy-to-read further introduction to Behavioral economics, check out this factsheet.