Behavioral Economics

Behavioral Economics

Behavioral Economics is the combination of psychology and economics that investigates what happens in markets in which some of the agents display human limitations and complications. We begin with a preliminary question about relevance. Does some combination of market forces, learning and evolution render these human qualities irrelevant? No. Because of limits of arbitrage less than perfect age...

Behavioral economics

Behavioral economics uses evidence from psychology and other social sciences to create a precise and fruitful alternative to traditional economic theories, which are based on optimization. Behavioral economics may interest some biologists, as it shifts the basis for theories of economic choice away from logical calculation and maximization and toward biologically plausible mechanisms.

Behavioral Economics Introduction: Definitions and Naming Problems in Behavioral Economics

‘Normative Behavioral Economics’ Revisited: Toward a Behavioral Normative Economics

A little more than a decade ago, Nathan Berg asked the question why behavioral economics had not yet inspired a reorientation of normative economics. Given the ever rising interest in the new, psychologically informed economics, the present paper will outline the way reasoning about the normative implications of behavioral economics has developed since Berg raised the issue. We argue that behav...

Perspective Behavioral economics: Reunifying psychology and economics

Because economics is the science of how resources are allocated by individuals and by collective institutions like firms and markets, the psychology of individual behavior should underlie and inform economics, much as physics informs chemistry; archaeology informs anthropology; or neuroscience informs cognitive psychology. However, economists routinely—and proudly—use models that are grossly in...