1st Edition

Behavioral Economics Evidence, Theory, and Welfare

By Brandon Lehr Copyright 2022
    542 Pages 79 B/W Illustrations
    by Routledge

    542 Pages 79 B/W Illustrations
    by Routledge

    Behavioral Economics: Evidence, Theory, and Welfare provides an engaging and accessible introduction to the motivating questions, real-world evidence, theoretical models, and welfare implications of behavioral economics concepts. Applications and examples — from household decisions, finance, public finance, labor, business, health, development, politics, education, energy, and sports — illustrate the broad relevance of behavioral economics for consumers, firms, markets, and policy makers alike.

    This textbook provides readers with both the intuition and analytical tools to apply behavioral economics concepts in understanding the complex social world. Each part of the book covers a key concept, beginning with a range of empirical evidence that is anomalous within the standard economics framework. In light of this evidence, a second chapter introduces and applies a nonstandard behavioral modeling approach. The last chapter of each part explores market reactions and policy responses to individuals behaving in nonstandard ways. Numerous exercises of varying types and levels provide readers the opportunity to check and enrich their understanding.

    The book’s clear structure orients readers to the many concepts of behavioral economics. It also highlights the process by which economists evaluate evidence and disentangle theories with different social welfare implications. Accessible to students from diverse economic backgrounds, this textbook is an ideal resource for courses on behavioural economics, experimental economics and related areas. The accompanying Solutions Manual further extends learning and engagement.

    Part I Foundations

    1 Introduction

    2 Standard Decision Making

    3 Behavioral Welfare Economics

    Part II Intertemporal Preferences

    4 Discounted Utility Model Anomalies

    5 Present Bias

    6 Consumption Dependence

    7 Market & Policy Responses to Present Bias

    Part III Reference-Dependent Preferences

    8 Reference-Independence Anomalies

    9 Reference Dependence

    10 Market & Policy Responses to Loss Aversion

    Part IV Preferences over Uncertainty

    11 Expected Utility Anomalies

    12 Non-Expected Utility

    Part V Social Preferences

    13 Self-Interested Preference Anomalies

    14 Social Preferences

    15 Market & Policy Responses to Social Preferences

    Part VI Beliefs

    16 Belief Anomalies

    17 Nonstandard Beliefs

    18 Market & Policy Responses to Nonstandard Beliefs

    Part VII Decision Processes

    19 Mental Accounting

    20 Inattention

    21 Market & Policy Responses to Mental Accounting & Inattention



    Brandon Lehr is Associate Professor of Economics at Occidental College, Los Angeles, USA.