Behavioral Economics PDF
Preview Behavioral Economics
Behavioral Economics O ver the last few decades behavioral economics has revolutionized the discipline. It has done so by putting the human back into economics, by recognizing that people sometimes make mistakes, care about others, and are generally not as cold and calculating as economists have traditionally assumed. The results have been exciting and fascinating, and have fundamentally changed the way we look at economic behavior. This textbook introduces all the key results and insights of behavioral economics to a student audience. Ideas such as mental accounting, prospect theory, present bias, inequality aversion, and learning are explained in detail. These ideas are also applied in diverse settings such as auctions, stock market crashes, charitable donations, and health care, to show why behavioral economics is crucial to understanding the world around us. Consideration is also given to what makes people happy, and how we can potentially nudge people to be happier. This new edition contains expanded and updated coverage of neuroeconomics, emotions, deception, and the contrast between group and individual behavior, among other topics, to ensure that readers are kept up to speed with this fast- paced (cid:191) eld. A companion website is also now available containing a test bank of questions and worked examples allowing users to see for themselves how changing the parameters can change the outcomes. This book remains the ideal introduction to behavioral economics for advanced undergraduate and graduate students. Edward Cartwright is a Senior Lecturer in Economics at the University of Kent, Canterbury, United Kingdom. A range of further resources for this book are available on the companion website: www.routledge.com/cw/cartwright. Routledge advanced texts in economics and (cid:191) nance 1. Financial Econometrics 9. Information Economics Peijie Wang Urs Birchler and Monika Bütler 2 . Macroeconomics for Developing 10. Financial Econometrics Countries (2nd edition) (2nd edition) Raghbendra Jha Peijie Wang 3. Advanced Mathematical 1 1. Development Finance Economics Debates, dogmas and new Rakesh Vohra directions Stephen Spratt 4. Advanced Econometric Theory John S. Chipman 1 2. Culture and Economics On values, economics and 5. Understanding Macroeconomic international business Theory Eelke de Jong John M. Barron, Bradley T. Ewing and Gerald J. Lynch 1 3. Modern Public Economics (2nd edition) 6. Regional Economics Raghbendra Jha Roberta Capello 14. Introduction to Estimating 7. Mathematical Finance Economic Models Core theory, problems and Atsushi Maki statistical algorithms Nikolai Dokuchaev 1 5. Advanced Econometric Theory 8 . Applied Health Economics J ohn Chipman Andrew M. Jones, Nigel Rice, Teresa Bago d’Uva and 1 6. Behavioral Economics Silvia Balia E dward Cartwright 17. Essentials of Advanced 20. Real Estate Economics Macroeconomic Theory A point to point handbook Ola Olsson Nicholas G. Pirounakis 18. Behavioral Economics and 21. Finance in Asia Finance Institutions, regulation and Michelle Baddeley policy Qiao Liu, Paul Lejot and 19. Applied Health Economics Douglas Arner (2nd edition) Andrew M. Jones, Nigel Rice, 22. Behavioral Economics Teresa Bago d’Uva and (2nd edition) Silvia Balia Edward Cartwright This page intentionally left blank Behavioral Economics Second edition Edward Cartwright First published 2011 by Routledge This edition published 2014 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2011, 2014 Edward Cartwright The right of Edward Cartwright to be identi(cid:191) ed as author of this work has been asserted by him in accordance with the Copyright, Designs and Patent Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice : Product or corporate names may be trademarks or registered trademarks, and are used only for identi(cid:191) cation and explanation without intent to infringe. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Cartwright, Edward. Behavioral economics/Edward Cartwright. pages cm Revised edition of the author’s Behavioral economics published in 2011. Includes bibliographical references and index. 1.Economics—Psychological aspects. I. Title. HB74.P8C37 2014 330.01’9—dc23 2013038838 ISBN: 978–0–415–73761–6 (hbk) ISBN: 978–0–415–73764–7 (pbk) ISBN: 978–1–315–81789–7 (ebk) Typeset in Times New Roman by Re(cid:191) neCatch Limited, Bungay, Suffolk Dedicated to Anna, So(cid:191) e, Kerry, and Robert This page intentionally left blank Contents List of (cid:191) gures xi List of tables xx Preface xxv PART I Introduction 1 1 An introduction to behavioral economics 3 PART II Economic behavior 31 2 Simple heuristics for complex choices 33 3 Choice with risk 100 4 Choosing when to act 164 5 Learning from new information 203 6 Interacting with others 248 7 Social preferences 320 PART III Origins of behavior 369 8 Evolution and culture 371 9 Neuroeconomics 413
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