Advances in Behavioral Economics

by Camerer, Colin F.; Loewenstein, George; Rabin, Matthew

• ISBN13: 9780691116822
• ISBN10: 0691116822
• Format: Paperback
• Copyright: 2003-12-08
• Publisher: Princeton Univ Pr

Summary

Twenty years ago, behavioral economics did not exist as a field. Most economists were deeply skeptical--even antagonistic--toward the idea of importing insights from psychology into their field. Today, behavioral economics has become virtually mainstream. It is well represented in prominent journals and top economics departments, and behavioral economists, including several contributors to this volume, have garnered some of the most prestigious awards in the profession. This book assembles the most important papers on behavioral economics published since around 1990. Among the 25 articles are many that update and extend earlier foundational contributions, as well as cutting-edge papers that break new theoretical and empirical ground. Advances in Behavioral Economicswill serve as the definitive one-volume resource for those who want to familiarize themselves with the new field or keep up-to-date with the latest developments. It will not only be a core text for students, but will be consulted widely by professional economists, as well as psychologists and social scientists with an interest in how behavioral insights are being applied in economics. The articles, which follow Colin Camerer and George Loewenstein's introduction, are by the editors, George A. Akerlof, Linda Babcock, Shlomo Benartzi, Vincent P. Crawford, Peter Diamond, Ernst Fehr, Robert H. Frank, Shane Frederick, Simon Gauml;chter, David Genesove, Itzhak Gilboa, Uri Gneezy, Robert M. Hutchens, Daniel Kahneman, Jack L. Knetsch, David Laibson, Christopher Mayer, Terrance Odean, Ted O'Donoghue, Aldo Rustichini, David Schmeidler, Klaus M. Schmidt, Eldar Shafir, Hersh M. Shefrin, Chris Starmer, Richard H. Thaler, Amos Tversky, and Janet L. Yellen.

Table of Contents

List of Contributors	xi
Preface	xxi
Acknowledgments	xxv
PART ONE: INTRODUCTION	1	(52)
Behavioral Economics: Past, Present, Future	3	(50)
Colin F. Camerer
George Loewenstein
PART TWO: BASIC TOPICS	53	(340)
Reference-Dependence and Loss-Aversion
Experimental Tests of the Endowment Effect and the Coase Theorem	55	(20)
Daniel Kahneman
Jack L. Knetsch
Richard H. Thaler
Mental Accounting Matters	75	(29)
Richard H. Thaler
Preferences Over Risky and Uncertain Outcomes
Developments in Nonexpected-Utility Theory: The Hunt for a Descriptive Theory of Choice under Risk	104	(44)
Chris Starmer
Prospect Theory in the Wild: Evidence from the Field	148	(14)
Colin F. Camerer
Intertemporal Choice
Time Discounting and Time Preference: A Critical Review	162	(61)
Shane Frederick
George Loewenstein
Ted O'Donoghue
Doing It Now or Later	223	(29)
Ted O'Donoghue
Matthew Rabin
Fairness and Social Preferences
Fairness as a Constraint on Profit Seeking: Entitlements in the Market	252	(19)
Daniel Kahneman
Jack L. Knetsch
Richard H. Thaler
A Theory of Fairness, Competition, and Cooperation	271	(26)
Ernst Fehr
Klaus M. Schmidt
Incorporating Fairness into Game Theory and Economics	297	(29)
Matthew Rabin
Explaining Bargaining Impasse: The Role of Self-Serving Biases	326	(18)
Linda Babcock
George Loewenstein
Game Theory
Theory and Experiment in the Analysis of Strategic Interaction	344	(30)
Vincent P. Crawford
Behavioral Game Theory: Predicting Human Behavior in Strategic Situations	374	(19)
Colin F. Camerer
PART THREE: APPLICATIONS	393	(264)
Macroeconomics and Savings
Mental Accounting, Saving, and Self-Control	395	(34)
Hersh M. Shefrin
Richard H. Thaler
Golden Eggs and Hyperbolic Discounting	429	(29)
David Laibson
The Fair Wage-Effort Hypothesis and Unemployment	458	(25)
George A. Akerlof
Janet L. Yellen
Money Illusion	483	(27)
Eldar Shafir
Peter Diamond
Amos Tversky
Labor Economics
Fairness and Retaliation: The Economics of Reciprocity	510	(23)
Ernst Fehr
Simon Gachter
Labor Supply of New York City Cab Drivers: One Day at a Time	533	(15)
Colin F. Camerer
Linda Babcock
George Loewenstein
Richard H. Thaler
Wages, Seniority, and the Demand for Rising Consumption Profiles	548	(24)
Robert H. Frank
Robert M. Hutchens
Incentives, Punishment, and Behavior	572	(18)
Uri Gneezy
Aldo Rustichini
Finance
Myopic Loss-Aversion and the Equity Premium Puzzle	590	(16)
Shlomo Benartzi
Richard H. Thaler
Do Investors Trade Too Much?	606	(27)
Terrance Odean
Loss-Aversion and Seller Behavior: Evidence from the Housing Market	633	(24)
David Genesove
Christopher Mayer
PART FOUR: NEW FOUNDATIONS	657	(68)
Case-Based Decision Theory	659	(30)
Itzhak Gilboa
David Schmeidler
Out of Control: Visceral Influences on Behavior	689	(36)
George Loewenstein
Index	725