Behavioral economics

behavioral financebehavioural economicseconomic psychologybehavioural financebehavioralbehavioral economistBehavioral economistsmarket psychologyeconomic behaviorinvestor psychology
Behavioral economics studies the effects of psychological, cognitive, emotional, cultural and social factors on the economic decisions of individuals and institutions and how those decisions vary from those implied by classical theory.wikipedia
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Daniel Kahneman

KahnemanDaniel KahnemannKahneman, Daniel
In 2002, psychologist Daniel Kahneman was awarded the Nobel Memorial Prize in Economic Sciences "for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty". Psychologists in this field, such as Ward Edwards, Amos Tversky and Daniel Kahneman began to compare their cognitive models of decision-making under risk and uncertainty to economic models of rational behavior.
Daniel Kahneman (דניאל כהנמן; born March 5, 1934) is an Israeli-American psychologist and economist notable for his work on the psychology of judgment and decision-making, as well as behavioral economics, for which he was awarded the 2002 Nobel Memorial Prize in Economic Sciences (shared with Vernon L. Smith).

Richard Thaler

Richard H. ThalerThalerThaler, Richard
In 2017, economist Richard Thaler was awarded the Nobel Memorial Prize in Economic Sciences for "his contributions to behavioral economics and his pioneering work in establishing that people are predictably irrational in ways that defy economic theory." One treatment of this idea comes from Cass Sunstein and Richard Thaler's Nudge.
Thaler is a theorist in behavioral economics and has collaborated with Daniel Kahneman, Amos Tversky and others on multiple occasions in further defining that field.

Framing (social sciences)

framingpolitical framingframe
Many economic behaviors are not fully explained by these models, such as heuristics and framing.
Framing biases affecting investing, lending, borrowing decisions make one of the themes of behavioral finance.

Cass Sunstein

Cass R. SunsteinCan It Happen Here?: Authoritarianism in AmericaSunstein, Cass
One treatment of this idea comes from Cass Sunstein and Richard Thaler's Nudge.
Cass Robert Sunstein FBA (born September 21, 1954) is an American legal scholar, particularly in the fields of constitutional law, administrative law, environmental law, and law and behavioral economics, who was the Administrator of the White House Office of Information and Regulatory Affairs in the Obama administration from 2009 to 2012.

László Garai

Laszlo Garai
Economic psychology emerged in the 20th century in the works of Gabriel Tarde, George Katona, and Laszlo Garai.
László Garai (born 29 August 1935) is a scholar of psychology: studies theoretical psychology, social psychology and economic psychology.

Amos Tversky

TverskyTversky, AmosA. Tversky
Psychologists in this field, such as Ward Edwards, Amos Tversky and Daniel Kahneman began to compare their cognitive models of decision-making under risk and uncertainty to economic models of rational behavior.
His early work with Kahneman focused on the psychology of prediction and probability judgment; later they worked together to develop prospect theory, which aims to explain irrational human economic choices and is considered one of the seminal works of behavioral economics.

Nudge (book)

NudgeNudge: Improving Decisions about Health, Wealth, and HappinessNudge'' (book)
One treatment of this idea comes from Cass Sunstein and Richard Thaler's Nudge.
The book draws on research in psychology and behavioral economics to defend libertarian paternalism and active engineering of choice architecture.

Matthew Rabin

Rabin
Intertemporal choice behavior is largely inconsistent, as exemplified by George Ainslie's hyperbolic discounting—one of the prominently studied observations—and further developed by David Laibson, Ted O'Donoghue and Matthew Rabin.
Matthew Joel Rabin (born December 27, 1963) is the Pershing Square Professor of Behavioral Economics in the Harvard Economics Department and Harvard Business School.

Uri Gneezy

Gneezy
The work on "intrinsic motivation by Gneezy and Rustichini and "identity" by Akerlof and Kranton assumes that agents derive utility from adopting personal and social norms in addition to conditional expected utility. According to Aggarwal, in addition to behavioral deviations from rational equilibrium, markets are also likely to suffer from lagged responses, search costs, externalities of the commons, and other frictions making it difficult to disentangle behavioral effects in market behavior.
Uri Hezkia Gneezy (born June 6, 1967) is the Epstein/Atkinson Endowed Chair in Behavioral Economics and Professor of Economics & Strategy at the University of California, San Diego's Rady School of Management.

Hyperbolic discounting

delay aversiondiscountinghyperbolic discount function
Intertemporal choice behavior is largely inconsistent, as exemplified by George Ainslie's hyperbolic discounting—one of the prominently studied observations—and further developed by David Laibson, Ted O'Donoghue and Matthew Rabin.
It is one of the cornerstones of behavioral economics and its brain-basis is actively being studied by neuroeconomics researchers.

George Ainslie (psychologist)

George Ainsliepicoeconomics
Intertemporal choice behavior is largely inconsistent, as exemplified by George Ainslie's hyperbolic discounting—one of the prominently studied observations—and further developed by David Laibson, Ted O'Donoghue and Matthew Rabin.
George W. Ainslie is an American psychiatrist, psychologist and behavioral economist.

Dan Ariely

Ariely, D.Ariely, Dan
Behavioral economics caught on among the general public with the success of books such as Dan Ariely's Predictably Irrational. Practitioners of the discipline have studied quasi-public policy topics such as broadband mapping.
Dan Ariely (דן אריאלי; born April 29, 1967) is an Israeli-American James B. Duke Professor of Psychology and Behavioral Economics at Duke University.

David Laibson

Intertemporal choice behavior is largely inconsistent, as exemplified by George Ainslie's hyperbolic discounting—one of the prominently studied observations—and further developed by David Laibson, Ted O'Donoghue and Matthew Rabin.
His research focuses on macroeconomics, intertemporal choice, behavioral economics and neuroeconomics.

Gabriel Tarde

TardeGabriel de TardeTarde, Gabriel
Economic psychology emerged in the 20th century in the works of Gabriel Tarde, George Katona, and Laszlo Garai.
Among the concepts that Tarde initiated were the group mind (taken up and developed by Gustave Le Bon, and sometimes advanced to explain so-called herd behaviour or crowd psychology), and economic psychology, where he anticipated a number of modern developments.

Economics

economiceconomisteconomic theory
Nudge is a concept in behavioral science, political theory and economics which proposes positive reinforcement and indirect suggestions as ways to influence the behavior and decision making of groups or individuals.
Other broad distinctions within economics include those between positive economics, describing "what is", and normative economics, advocating "what ought to be"; between economic theory and applied economics; between rational and behavioural economics; and between mainstream economics and heterodox economics.

Loss aversion

avoid perceived lossesdire consequenceloss averse
Other key observations include the asymmetry between decisions to acquire or keep resources, known as the "bird in the bush" paradox, and loss aversion, the unwillingness to let go of a valued possession.
In past behavioral economics studies, users participate up until the threat of loss equals any incurred gains.

Rationality

rationalrational thoughtrational thinking
Bounded rationality is the idea that when individuals make decisions, their rationality is limited by the tractability of the decision problem, their cognitive limitations and the time available.
Behavioral economics aims to account for economic actors as they actually are, allowing for psychological biases, rather than assuming idealized instrumental rationality.

David Gal

David Gal has argued that many of these issues stem from behavioral economics being too concerned with understanding how behavior deviates from standard economic models rather than with understanding why people behave the way they do.
He is best known for his critiques of behavioral economics, and in particular his critique of the behavioral economics concept of loss aversion.

Neuroeconomics

neuroeconomistneuro-economics
For example, behavioral economists are investigating neuroeconomics, which is entirely experimental and has not been verified in the field.
It combines research from neuroscience, experimental and behavioral economics, and cognitive and social psychology.

Affective forecasting

Affect forecastsaffective forecastsforecast
Psychological traits such as overconfidence, projection bias, and the effects of limited attention are now part of the theory.
Behavioral economists have incorporated discrepancies between forecasts and actual emotional outcomes into their models of different types of utility and welfare.

Experimental economics

experimental economistexperimentseconomic experiments
Some economists see a fundamental schism between experimental economics and behavioral economics, but prominent behavioral and experimental economists tend to share techniques and approaches in answering common questions.
Experiments may be conducted in the field or in laboratory settings, whether of individual or group behavior.

Behavioural Insights Team

Behavioural Insights Team (BIT)
Notable applications of nudge theory include the formation of the British Behavioural Insights Team in 2010.
The Behavioural Insights Team (BIT), also known unofficially as the "Nudge Unit", is an organisation that was set up to apply nudge theory (behavioural economics and psychology) to try to improve government policy and services as well as to save the UK government money.

Maurice Allais

AllaisMaurice F. C . AllaisMaurice Félix Charles Allais
Observed and repeatable anomalies eventually challenged those hypotheses, and further steps were taken by Maurice Allais, for example, in setting out the Allais paradox, a decision problem he first presented in 1953 that contradicts the expected utility hypothesis.
He was also responsible for early work in Behavioral economics, which in the US is generally attributed to Daniel Kahneman and Amos Tversky.

Cumulative prospect theory

In 1992, in the Journal of Risk and Uncertainty, Kahneman and Tversky gave a revised account of prospect theory that they called cumulative prospect theory.
In 2002, Daniel Kahneman received the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel for his contributions to behavioral economics, in particular the development of Cumulative Prospect Theory (CPT).

Ernst Fehr

E. FehrFehr
Ernst Fehr, Armin Falk, and Rabin studied fairness, inequity aversion and reciprocal altruism, weakening the neoclassical assumption of perfect selfishness.
He is also well known for his important contributions to the new field of neuroeconomics, as well as to behavioral economics, behavioral finance and experimental economics.