Behavioral Economics Research Area
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A Behavioral Economics Research Area is an Economics research area that analyzes human behavior in economic decision-making.
- Context:
- It can explore topics such as:
- Heuristics in Decision-Making, where individuals rely on cognitive shortcuts instead of strict logic.
- Framing Effect, where the way information is presented can affect decisions.
- Loss Aversion Preference, where people prefer to avoid losses rather than acquire equivalent gains.
- Time Inconsistency, where people tend to make decisions that favor short-term rewards over long-term benefits.
- Prospect Theory describes how people choose between probabilistic alternatives involving risk.
- ...
- It can explore topics such as:
- Example(s):
- Behavioral Economics, 1990 – Focus on heuristics and biases influencing financial decisions.
- Behavioral Economics, 2000 – Introduction of Prospect Theory and its application to market anomalies.
- Behavioral Economics, 2010 – Emphasis on real-world experiments in decision-making under uncertainty.
- Behavioral Economics, 2020 – Studies examining nudges and other behavioral interventions in public policy.
- Behavioral Economics, 2025 – Future predictions may include deeper integrations with AI and machine learning for real-time decision optimization.
- ...
- Counter-Example(s):
- Classical Economics, where it is assumed that individuals act with perfect rationality and have complete information.
- Expected Utility Theory, which does not account for cognitive biases and heuristics in decision-making.
- See: Human Nature, Experimental Economics, Cognitive Bias, Allocation Of Resources, Bounded Rationality, Rationality, Economic Agent, Behavioral Model, Psychology, Microeconomics.
References
2016
- (Schurr & Ritov, 2016) ⇒ Amos Schurr, and Ilana Ritov. (2016). “Winning a Competition Predicts Dishonest Behavior.” In: Proceedings of the National Academy of Sciences.
2014
- (Wikipedia, 2014) ⇒ http://en.wikipedia.org/wiki/behavioral_economics Retrieved:2014-1-7.
- Behavioral economics and the related field, behavioral finance, study the effects of social, cognitive, and emotional factors on the economic decisions of individuals and institutions and the consequences for market prices, returns, and the resource allocation.[1] The fields are primarily concerned with the bounds of rationality of economic agents. Behavioral models typically integrate insights from psychology with microeconomic theory; in so doing, these behavioral models cover a range of concepts, methods, and fields. [2] The study of behavioral economics includes how market decisions are made and the mechanisms that drive public choice. There are three prevalent themes in behavioral finances:[3]
- Heuristics: People often make decisions based on approximate rules of thumb and not strict logic.
- Framing: The collection of anecdotes and stereotypes that make up the mental emotional filters individuals rely on to understand and respond to events.
- Market inefficiencies: These include mis-pricings and non-rational decision making.
- Behavioral economics and the related field, behavioral finance, study the effects of social, cognitive, and emotional factors on the economic decisions of individuals and institutions and the consequences for market prices, returns, and the resource allocation.[1] The fields are primarily concerned with the bounds of rationality of economic agents. Behavioral models typically integrate insights from psychology with microeconomic theory; in so doing, these behavioral models cover a range of concepts, methods, and fields. [2] The study of behavioral economics includes how market decisions are made and the mechanisms that drive public choice. There are three prevalent themes in behavioral finances:[3]
- ↑ Lin, Tom C. W., A Behavioral Framework for Securities Risk (April 16, 2012). 34 Seattle University Law Review 325 (2011).
- ↑ Search of behavioural economics at (2008–) The New Palgrave Dictionary of Economics Online.[1]
- ↑ Template:Harvnb
2011
- (Ariely, 2011) ⇒ Dan Ariely. (2011). “Predictably Irrational: The Hidden Forces That Shape Our Decisions.” Harper Perennial.
- NOTE: Ariely's work examines how humans often act irrationally in predictable ways, challenging traditional economic theories of rational decision-making.
2005
- (Thaler & Benartzi, 2005) ⇒ Richard H. Thaler and Shlomo Benartzi. (2005). “Save More Tomorrow: Using Behavioral Economics to Increase Employee Saving.” *Journal of Political Economy* 112(S1): S164–S187.
- NOTE: This paper introduced the concept of Save More Tomorrow, showing how simple behavioral interventions can significantly influence personal savings behavior.
2002
- (Tversky & Kahneman, 2002) ⇒ Daniel Kahneman and Amos Tversky. (2002). “Judgment under Uncertainty: Heuristics and Biases.” In: *Handbook of the Fundamentals of Financial Decision Making*, pp. 99-127.
- NOTE: A foundational work that explores the role of heuristics in decision-making and the various cognitive biases that influence economic behavior.
2000
- (Camerer, 2000) ⇒ Colin F. Camerer. (2000). “Prospect Theory in the Wild: Evidence from the Field.” In: *Choices, Values, and Frames*, pp. 288-298.
- NOTE: Camerer applies Prospect Theory to real-world settings, providing empirical evidence for behavioral economics principles in practical situations.
1979
- (Kahneman & Tversky, 1979) ⇒ Daniel Kahneman and Amos Tversky. (1979). “Prospect Theory: An Analysis of Decision under Risk.” *Econometrica*, 47(2): 263-291.
- NOTE: This seminal paper introduced Prospect Theory, which revolutionized understanding of how people evaluate risk and make decisions under uncertainty.