Behavioral Economics is the combination of psychology and economics that researches what happens in markets when some of the agents display human limitations and complications. The article highlights and tries to explain how humans behave and how they deviate from the traditional economic model. These deviations from the traditional economic model are discussed; human being's lack of self control/willpower, how humans process information, how/why humans make rational or irrational decisions and why humans sometimes make choices that are not based on self-interest. The article then highlights how behavioral economics impacts macroeconomic policy as it relates to consumer saving, pricing, monetary policy and money in general. Several behavioral economic theories are then highlighted to help explain how behavioral economics is impacting the field of economics.