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Behavioral economics and austrian economics: Lessons for policy and the prospects of nudges

Author

Listed:
  • Roberta Muramatsu

    (Department of Economics, Mackenzie Presbyterian University, Brazil)

  • Fabio Barbieri

    (Department of Economics, University of São Paulo, Brazil)

Abstract

This paper draws on Austrian Economics contributions and its criticism of interventionist policies and programs to assess the prospects of Behavioral economics nudges and libertarian paternalism in a world where fallible knowledge is pervasive. We go on to argue that one of the main problems underlying behaviorally informed regulations and nudging in the real world is epistemic. This is largely so because policy makers tend to underestimate "the importance of the knowledge of the particular circumstances of time and place" and their own cognitive limitations. It concludes with two advices to policy makers and regulators. One is that decisions over nudging are to be made on a case-to-case basis. Another is that it is worthwhile to dig deeper into specificities of institutional environments suggesting under which conditions nudges can(not) deliver what they promise.

Suggested Citation

  • Roberta Muramatsu & Fabio Barbieri, 2017. "Behavioral economics and austrian economics: Lessons for policy and the prospects of nudges," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 1(1), pages 73-78, February.
    • Handle: RePEc:beh:jbepv1:v:1:y:2017:i:1:p:73-78
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    austrian economics; behavioral economics; policy; biases; nudges;
    All these keywords.

    JEL classification:

    • B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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