Behavioral Economics : Evidence, Theory, and Welfare book cover
1st Edition

Behavioral Economics
Evidence, Theory, and Welfare

ISBN 9780367426446
Published August 17, 2021 by Routledge
542 Pages 79 B/W Illustrations

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Book Description

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.

Table of Contents

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


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