Interest in economics is at an all-time high. Among the challenges facing the nation is an economy with rapidly rising unemployment, failures of major businesses and industries, and continued dependence on oil with its wildly fluctuating price. Economists have dealt with such questions for generations, but they have taken on new meaning and significance.Tackling these questions and encompassing analysis of traditional economic theory and topics as well as those that economists have only more recently addressed, 21st Century Economics: A Reference Handbook is a must-have reference resource.Key FeaturesProvides highly readable summaries of theory and models in key areas of micro and macroeconomics, helpful for students trying to get a "big picture" sense of the fieldIncludes introductions to relevant theory as well as empirical evidence, useful for readers interested in learning about economic analysis of an issue as well for students embarking on research projectsFeatures chapters focused on cutting-edge topics with appeal for economists seeking to learn about extensions of analysis into new areas as well as new approaches Presents models in graphical format and summarizes empirical evidence in ways that do not require much background in statistics or econometrics, so as to maximize accessibility to students.
Chapter 84: Behavioral Economics
Behavioral economics is the subfield of economics that 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. In a frequently cited survey article, Rabin (1998) describes behavioral economics as “psychology and economics,” which is a frequently used synonym for behavioral economics. Similarly, Camerer (1999) defines behavioral economics as a research program aimed at reunifying psychology and economics.
Definitions and Naming Problems
Reunification is a relevant description because of the rather tumultuous relationship between psychology and economics in the arc of economic history. A number of preeminent founders of important schools of economic thought, including Adam Smith, wrote extensively on psychological dimensions of human experience and economic ...