Behavioral Economics for Dummies

by Altman, Morris

• ISBN13: 9781118085035
• ISBN10: 1118085035
• Edition: 1st
• Format: Paperback
• Copyright: 2012-02-28
• Publisher: For Dummies

Summary

A guide to the study of how and why you really make financial decisions While classical economics is based on the notion that people act with rational self-interest, many key money decisions-like splurging on an expensive watch-can seem far from rational. The field of behavioral economics sheds light on the many subtle and not-so-subtle factors that contribute to our financial and purchasing choices. And in Behavioral Economics For Dummies, readers will learn how social and psychological factors, such as instinctual behavior patterns, social pressure, and mental framing, can dramatically affect our day-to-day decision-making and financial choices. Based on psychology and rooted in real-world examples, Behavioral Economics For Dummies offers the sort of insights designed to help investors avoid impulsive mistakes, companies understand the mechanisms behind individual choices, and governments and nonprofits make public decisions. A friendly introduction to the study of how and why people really make financial decisions The author is a professor of behavioral and institutional economics at Victoria University An essential component to improving your financial decision-making (and even to understanding current events), Behavioral Economics For Dummies is important for just about anyone who has a bank account and is interested in why-and when-they spend money.

Author Biography

Morris Altman, PhD, is a professor of behavioral economics at Victoria University of Wellington in New Zealand and a professor of economics at the University of Saskatchewan in Canada. He is on the board of the Society for the Advancement of Behavioral Economics and is a former president of that organization. He also edited the Handbook of Contemporary Behavioral Economics.

Table of Contents

Introduction 1

Part I: Introducing Behavioral Economics: The Science of Making Real-World Choices 7

Chapter 1: Decoding Behavioral Economics 9

Chapter 2: Getting Real about Assumptions 19

Chapter 3: Neuroeconomics: Exploring the Brain for Economic Analysis 41

Chapter 4: Why Incentives and Markets Matter, but Money Isn’t Everything 65

Part II: Understanding Choice 89

Chapter 5: Exploring the Limits to Free Choice 91

Chapter 6: Quick and Simple Heuristics and Real-World Decision Making 107

Chapter 7: How the Framing of Choices Affects Decision Making 131

Chapter 8: How Norms, Peers, History, and Culture Influence Choice 153

Chapter 9: Why Gender, Children, and Age Matter for Economic Analysis 167

Part III: Growing the Economic Pie: The Economic Importance of Ethics, Well-Being, and Culture 181

Chapter 10: Why Smart People Pay Taxes, Recycle, and Even Break the Law 183

Chapter 11: Labor Supply in the Real World 197

Chapter 12: The Black Box of the Firm: Human Relationships and Productivity 215

Chapter 13: The Good Economy: How Ethical Behavior Can Grow the Economy 229

Chapter 14: Why Institutions Matter 243

Part IV: When Bubbles and Busts and Inefficiencies Are Possible: Some Behavioral Insights into the Strange World of Economic Reality 257

Chapter 15: Deciphering Behavioral Finance 259

Chapter 16: Looking into Recessions and Depressions 275

Chapter 17: The Art and Science of Happiness: Can You Be Happy without More Money? 291

Part V: The Part of Tens 309

Chapter 18: Ten (Or So) Key Public Policy Implications of Behavioral Economics 311

Chapter 19: Ten (Or So) Experiments in Behavioral Economics 321

Chapter 20: Ten Decision-Making Lessons from Behavioral Economics 333

Index 341