This lecture discusses how behavioral economics integrates psychology into traditional economic models to better explain real-world behavior. It contrasts the neoclassical model's rational assumptions with behavioral insights, highlighting anomalies and bounded rationality. The lecture also compares economic models to those in physics and biology, emphasizing their evolution and limitations. It distinguishes normative (prescriptive) from descriptive approaches, showing how behavioral economics addresses deviations from rationality to refine economic theory.