Behavioral Economics: Definition, History, and References
Behavioral economics is an interdisciplinary field which applies psychological theories of human behavior to the economic sphere. This field of study seeks to understand how people make decisions, including financial decisions, and the implications of such decisions. It is a relatively new field, and its insights are being used to inform policy decisions in areas such as healthcare, finance, and labor markets.
Definition
Behavioral economics is a branch of economics which focuses on the study of human behavior and its impact on economic decision making. This field of study looks at how people make decisions, particularly financial decisions, and their implications. It combines insights from psychology, sociology, and economics to understand how human behavior affects economic decisions. This includes topics such as consumer choice, financial decisions, and the implications of such decisions for the economy.
History
Behavioral economics has only been around since the 1970s, when it was developed by psychologists and economists such as Herbert Simon, Richard Thaler, Daniel Kahneman, and Amos Tversky. It was initially seen as a radical departure from traditional economic theory, which relied on assumptions such as perfect information and rational decision-making. However, since its inception, behavioral economics has been embraced by many economists and has become an accepted field of study.
References
DellaVigna, S. (2009). Psychology and economics: Evidence from the field. Journal of Economic Literature, 47(2), 315-72.
Kahneman, D., Slovic, P., & Tversky, A. (1982). Judgment under uncertainty: Heuristics and biases. Cambridge: Cambridge University Press.
Thaler, R.H. (2015). Misbehaving: The making of behavioral economics. New York: W.W. Norton.
Tversky, A., & Kahneman, D. (1981). The framing of decisions and the psychology of choice. Science, 211(4481), 453-58.