The Foundations of Behavioral Economic Analysis

This is the first definitive introduction to behavioral economics aimed at advanced undergraduate and postgraduate students. Authoritative, cutting edge, yet accessible, it guides the reader through theory and evidence, providing engaging and relevant applications throughout. It is divided into nine parts and 24 chapters: Part I is on behavioral economics of risk, uncertainty, and ambiguity. The evidence against expected utility theory is examined, and the behavioral response is outlined; the best empirically supported theory is prospect theory. Part II considers other-regarding preferences. The evidence from experimental games on human sociality is given, followed by models and applications of inequity aversion, intentions based reciprocity, conditional cooperation, human virtues, and social identity. Part III is on time discounting. It considers the evidence against the exponential discounted utility model and describes several behavioral models such as hyperbolic discounting, attribute based models and the reference time theory. Part IV describes the evidence on classical game theory and considers several models of behavioral game theory, including level-k and cognitive hierarchy models, quantal response equilibrium, and psychological game theory. Part V considers behavioral models of learning that include evolutionary game theory, classical models of learning, experience weighted attraction model, learning direction theory, and stochastic social dynamics. Part VI studies the role of emotions; among other topics it considers projection bias, temptation preferences, happiness economics, and interaction between emotions and cognition. Part VII considers bounded rationality. The three main topics considered are judgment heuristics and biases, mental accounting, and behavioral finance. Part VIII considers behavioral welfare economics; the main topics are soft paternalism, and choice-based measures of welfare. Finally, Part IX gives an abbreviated taster course in neuroeconomics....

Almost all the chapters follow a basic structure: they sketch the neoclassical theory; review evidence on its empirical plausibility; introduce alternative behavioral theories; finally go on to discuss further evidence of the newer theories' relative successes and failures compared to the neoclassical theories. A lot of thought has gone into writing the introductions of each section as they outline the broad trends, debates, and core empirical results, making it easy to get into the detailed chapters with a clear idea of the direction of research in that topic.To sum it up, the book ends up doing exactly what it promised, take stock of behavioral economicscourse text for advanced students.., a research handbook for behavioral economists, and an invitation to economists and other social scientists of all persuasions to explore this exciting new field.

Auteur
Sanjit Dhami is Professor of Economics at the University of Leicester. He studied at the Delhi School of Economics and the University of Toronto for his Masters, MPhil, and PhD degrees in economics. He has previously taught at the Universities of Toronto, Essex, and Newcastle. His research has mainly focused on behavioral economic theory and its applications. He has published on the axiomatic foundations of the various components of prospect theory, behavioral political economy using other-regarding preferences, behavioral time preferences, foundations of behavioral game theory, and applications in tax evasion, stochastic dominance concepts under other-regarding preferences, and in behavioral law and economics.

Contenu

• Preface

• Introduction

• Part I: Behavioral Economics of Risk, Uncertainty, and Ambiguity

• Introduction to Part I

• 1: The Evidence on Human Choice under Risk and Uncertainty

• 2: Behavioral Models of Decision Making

• 3: Applications of Behavioral Decision Theory

• 4: Human Behavior Under Ambiguity

• Part II: Other-Regarding Preferences

• Introduction to Part II

• 5: The Evidence on Human Sociality

• 6: Models of Other-Regarding Preferences

• 7: Human Morality and Social Identity

• 8: Incentives and Other-Regarding Preferences

• Exercises

• Part III: Behavioral Time Discounting

• Introduction to Part III

• 9: The Evidence on Temporal Human Choice

• 10: Behavioral Models of Time Discounting

• 11: Applications of Present Biased Preferences

• Exercises

• Part IV: Behavioral Game Theory

• Introduction to Part IV

• 12: The Evidence on Strategic Human Choice

• 13: Models of Behavioral Game Theory

• Exercises

• Part V: Behavioral Models of Learning

• Introduction to Part V

• 14: Evolutionary Game Theory

• 15: Models of Learning

• 16: Stochastic Social Dynamics

• Appendices and Exercises

• Part VI: Emotions

• Introduction to Part VI

• 17: Emotions and Human Behavior

• 18: Interaction Between Emotions and Cognition

• Exercises

• Part VII: Bounded Rationality

• Introduction to Part VII

• 19: Judgment Heuristics

• 20: Mental Accounting

• 21: Bounded Rationality in Financial Markets

• Exercises

• Part VIII: Behavioral Welfare Economics

• Introduction to Part VIII

• 22: Behavioral Welfare Economics

• Exercises

• Part IX: Neuroeconomics

• Introduction to Part IX

• 23: Neuroeconomics

• Appendix on Game Theory

• Introduction

• Normal form games

• A basic taxonomy of some normal form games

• Two person zero sum games

• Selection criteria among Nash equilibria: Payoff dominance and Risk Dominance

• Extensive form games

• Games of incomplete information

• Correlated equilibrium