Behavioral Economics and Its Applications

Behavioral Economics and Its Applications

Economic
Economic Behavior

Over the last decade or so, behavioral economics has fundamentally changed the way economists conceptualize the world. Behavioral economics is an umbrella of approaches that seek to extend the standard economics framework to account for relevant features of human behavior that are absent in the standard economics frame- work. 2 Typically, this calls for borrowing from the neighboring social sciences, particularly from psychology and sociology. The emphasis is on well-documented empirical findings: at the core of behavioral economics is the conviction that making our model of an economic man more accurate will improve our understanding of economics, thereby making the discipline more useful.

Peter Diamond
Hannu Vartiainen

Princeton University Press,

2007

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