IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/26587.html
   My bibliography  Save this paper

Behavioral Economics

Author

Listed:
  • Berg, Nathan

Abstract

This article describes the emerging subfield known as behavioral economics, which borrows from psychology, empirically tests assumptions used elsewhere in economics, and provides theories that aim to be more realistic and closely tied to experimental and field data. Highlights from the experimental findings of behavioral economics are discussed. The article remarks critically on the role of empirical realism and continued use of as-if methodology in behavioral economics. Problems in normative behavioral economics are given special attention as debates arise concerning how to interpret empirical findings that contradict standard definitions of axiomatic rationality. Ecological rationality, methodological pluralism, and Simon's notion of bounded rationality are considered.

Suggested Citation

  • Berg, Nathan, 2010. "Behavioral Economics," MPRA Paper 26587, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:26587
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/26587/1/MPRA_paper_26587.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Camerer, Colin F & Hogarth, Robin M, 1999. "The Effects of Financial Incentives in Experiments: A Review and Capital-Labor-Production Framework," Journal of Risk and Uncertainty, Springer, vol. 19(1-3), pages 7-42, December.
    2. Charness, Gary & Grosskopf, Brit, 2001. "Relative payoffs and happiness: an experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 45(3), pages 301-328, July.
    3. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
    4. Nathan Berg & Gerd Gigerenzer, 2010. "As-if behavioral economics: neoclassical economics in disguise?," History of Economic Ideas, Fabrizio Serra Editore, Pisa - Roma, vol. 18(1), pages 133-166.
    5. Berg, Nathan, 2003. "Normative behavioral economics," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 32(4), pages 411-427, September.
    6. Christine Jolls & Cass R. Sunstein, 2006. "Debiasing through Law," The Journal of Legal Studies, University of Chicago Press, vol. 35(1), pages 199-242, January.
    7. Daniel Kahneman & Jack L. Knetsch & Richard H. Thaler, 1991. "Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 193-206, Winter.
    8. Catherine C. Eckel & Philip J. Grossman, 2008. "Forecasting Risk Attitudes: An Experimental Study Using Actual and Forecast Gamble Choices," Monash Economics Working Papers archive-01, Monash University, Department of Economics.
    9. Shogren, Jason F. & Seung Y. Shin & Dermot J. Hayes & James B. Kliebenstein, 1994. "Resolving Differences in Willingness to Pay and Willingness to Accept," American Economic Review, American Economic Association, vol. 84(1), pages 255-270, March.
    10. Carpenter Jeffrey P & Seki Erika, 2005. "Competitive Work Environments and Social Preferences: Field Experimental Evidence from a Japanese Fishing Community," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(2), pages 1-25, December.
    11. Luigino Bruni & Robert Sugden, 2007. "The road not taken: how psychology was removed from economics, and how it might be brought back," Economic Journal, Royal Economic Society, vol. 117(516), pages 146-173, January.
    12. Jen Shang & Rachel Croson, 2009. "A Field Experiment in Charitable Contribution: The Impact of Social Information on the Voluntary Provision of Public Goods," Economic Journal, Royal Economic Society, vol. 119(540), pages 1422-1439, October.
    13. Loewenstein, George & Thaler, Richard H, 1989. "Intertemporal Choice," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 181-193, Fall.
    14. Charles R. Plott & Kathryn Zeiler, 2007. "Exchange Asymmetries Incorrectly Interpreted as Evidence of Endowment Effect Theory and Prospect Theory?," American Economic Review, American Economic Association, vol. 97(4), pages 1449-1466, September.
    15. Catherine C. Eckel & Philip J. Grossman, 2002. "Sex Differences and Statistical Stereotyping in Attitudes Toward Financial Risk," Monash Economics Working Papers archive-03, Monash University, Department of Economics.
    16. Richard H. Thaler & Shlomo Benartzi, 2004. "Save More Tomorrow (TM): Using Behavioral Economics to Increase Employee Saving," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 164-187, February.
    17. Berg, Nathan & Eckel, Catherine & Johnson, Cathleen, 2010. "Inconsistency Pays?: Time-inconsistent subjects and EU violators earn more," MPRA Paper 26589, University Library of Munich, Germany.
    18. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
    19. Simon, Herbert A, 1986. "Rationality in Psychology and Economics," The Journal of Business, University of Chicago Press, vol. 59(4), pages 209-224, October.
    20. Matthew Rabin, 1998. "Psychology and Economics," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 11-46, March.
    21. Chetan Dave & Catherine Eckel & Cathleen Johnson & Christian Rojas, 2010. "Eliciting risk preferences: When is simple better?," Journal of Risk and Uncertainty, Springer, vol. 41(3), pages 219-243, December.
    22. Carmon, Ziv & Ariely, Dan, 2000. "Focusing on the Forgone: How Value Can Appear So Different to Buyers and Sellers," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 27(3), pages 360-370, December.
    23. Nathan Berg & Gerd Gigerenzer, 2007. "Psychology Implies Paternalism? Bounded Rationality may Reduce the Rationale to Regulate Risk-Taking," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 28(2), pages 337-359, February.
    24. Floris Heukelom, 2007. "Kahneman and Tversky and the Origin of Behavioral Economics," Tinbergen Institute Discussion Papers 07-003/1, Tinbergen Institute.
    25. Chris Starmer, 2005. "Normative notions in descriptive dialogues," Journal of Economic Methodology, Taylor & Francis Journals, vol. 12(2), pages 277-289.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Judith Clifton & Daniel Díaz‐Fuentes & Marcos Fernández‐Gutiérrez & Julio Revuelta, 2011. "Is Market‐Oriented Reform Producing A ‘Two‐Track’ Europe? Evidence From Electricity And Telecommunications," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 82(4), pages 495-513, December.
    2. repec:jes:wpaper:y:2012:v:4:p:296-305 is not listed on IDEAS
    3. Berg, Nathan, 2014. "Success from satisficing and imitation: Entrepreneurs' location choice and implications of heuristics for local economic development," Journal of Business Research, Elsevier, vol. 67(8), pages 1700-1709.
    4. Flynn, Sean Masaki & Donnelly, Michael, 2012. "Does labor contract completeness drive unionization? Experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(4), pages 445-454.
    5. Lotz, Aïleen, 2011. "An Economic Approach to the Self : the Dual Agent," MPRA Paper 50771, University Library of Munich, Germany.
    6. Ashraf, Mohammad Ali & Alam, Mirza Mohammad Didarul & Alexa, Lidia, 2021. "Making decision with an alternative mind-set: Predicting entrepreneurial intention toward f-commerce in a cross-country context," Journal of Retailing and Consumer Services, Elsevier, vol. 60(C).
    7. Lotz, Aileen & Gosselin, Pierre, 2012. "A dynamic model of interactions between conscious and unconscious," MPRA Paper 36697, University Library of Munich, Germany.
    8. Basel, Jörn S. & Brühl, Rolf, 2013. "Rationality and dual process models of reasoning in managerial cognition and decision making," European Management Journal, Elsevier, vol. 31(6), pages 745-754.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dohmen, Thomas, 2014. "Behavioral labor economics: Advances and future directions," Labour Economics, Elsevier, vol. 30(C), pages 71-85.
    2. Berg, Nathan & Biele, Guido & Gigerenzer, Gerd, 2010. "Does consistency predict accuracy of beliefs?: Economists surveyed about PSA," MPRA Paper 26590, University Library of Munich, Germany.
    3. Nathan Berg & Gerd Gigerenzer, 2010. "As-if behavioral economics: neoclassical economics in disguise?," History of Economic Ideas, Fabrizio Serra Editore, Pisa - Roma, vol. 18(1), pages 133-166.
    4. Eduard Marinov, 2017. "The 2017 Nobel Prize in Economics," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 117-159.
    5. Ihli, Hanna Julia & Chiputwa, Brian & Musshoff, Oliver, 2016. "Do Changing Probabilities or Payoffs in Lottery-Choice Experiments Affect Risk Preference Outcomes? Evidence from Rural Uganda," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 41(2), May.
    6. Committee, Nobel Prize, 2017. "Richard H. Thaler: Integrating Economics with Psychology," Nobel Prize in Economics documents 2017-1, Nobel Prize Committee.
    7. Holden, Stein T. & Tilahun, Mesfin, 2020. "Endowment Effects and Loss Aversion in the Risky Investment Game," CLTS Working Papers 1/20, Norwegian University of Life Sciences, Centre for Land Tenure Studies.
    8. Kerri Brick & Martine Visser & Justine Burns, 2012. "Risk Aversion: Experimental Evidence from South African Fishing Communities," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(1), pages 133-152.
    9. Nicolas Eber & Patrick Roger & Tristan Roger, 2024. "Finance and intelligence: An overview of the literature," Journal of Economic Surveys, Wiley Blackwell, vol. 38(2), pages 503-554, April.
    10. Ihli, Hanna Julia & Chiputwa, Brian & Musshoff, Oliver, 2013. "Do Changing Probabilities or Payoffs in Lottery-Choice Experiments Matter? Evidence from Rural Uganda," GlobalFood Discussion Papers 158146, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    11. Arnaud Reynaud & Stéphane Couture, 2012. "Stability of risk preference measures: results from a field experiment on French farmers," Theory and Decision, Springer, vol. 73(2), pages 203-221, August.
    12. Martin Binder, 2014. "Should evolutionary economists embrace libertarian paternalism?," Journal of Evolutionary Economics, Springer, vol. 24(3), pages 515-539, July.
    13. Rothengatter, Marloes, 2016. "Insights in cognitive patterns : Essays on heuristics and identification," Other publications TiSEM 5f812a9d-8968-48b8-8d1b-0, Tilburg University, School of Economics and Management.
    14. Ranganathan, Kavitha & Lejarraga, Tomás, 2021. "Elicitation of risk preferences through satisficing," Journal of Behavioral and Experimental Finance, Elsevier, vol. 32(C).
    15. Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-372, June.
    16. Chetan Dave & Catherine Eckel & Cathleen Johnson & Christian Rojas, 2010. "Eliciting risk preferences: When is simple better?," Journal of Risk and Uncertainty, Springer, vol. 41(3), pages 219-243, December.
    17. El Harbi, Sana & Bekir, Insaf & Grolleau, Gilles & Sutan, Angela, 2015. "Efficiency, equality, positionality: What do people maximize? Experimental vs. hypothetical evidence from Tunisia," Journal of Economic Psychology, Elsevier, vol. 47(C), pages 77-84.
    18. András Molnár & Christophe Heintz, 2016. "Beliefs About People’s Prosociality Eliciting predictions in dictator games," CEU Working Papers 2016_1, Department of Economics, Central European University.
    19. Jacobs Martin, 2016. "Accounting for Changing Tastes: Approaches to Explaining Unstable Individual Preferences," Review of Economics, De Gruyter, vol. 67(2), pages 121-183, August.
    20. Bogliacino, Francesco & Codagnone, Cristiano, 2021. "Microfoundations, behaviour, and evolution: Evidence from experiments," Structural Change and Economic Dynamics, Elsevier, vol. 56(C), pages 372-385.

    More about this item

    Keywords

    bounded rationality; ecological rationality; Herbert Simon; as-if; survey;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:26587. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.