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Behavioral economics and the economics of Keynes

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  • Pech, Wesley
  • Milan, Marcelo
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    Abstract

    The aim of this paper is two-fold: it first evaluates some of the psychological insights offered by Keynes in his economic theories, and secondly it weighs up these insights in the light of recent research in behavioral and experimental economics. We found that many of the psychological ideas set forth by Keynes in his economic works, especially in The General Theory, have a defensible behavioral foundation and fit broadly the actual behavior of economic agents in the real world as suggested by recent empirical evidence. As a consequence, we argue that Keynesian economics can benefit from this interaction, especially for issues related to judgment under uncertainty and building solid microfoundations for macroeconomics.

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    File URL: http://www.sciencedirect.com/science/article/B6W5H-4WM0J9W-3/2/c63c0462a7f7ba46662254314b9ac7e4
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics).

    Volume (Year): 38 (2009)
    Issue (Month): 6 (December)
    Pages: 891-902

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    Handle: RePEc:eee:soceco:v:38:y:2009:i:6:p:891-902

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    Web page: http://www.elsevier.com/locate/inca/620175

    Related research

    Keywords: Keynes Keynesian economics Behavioral economics Experimental economics Psychology;

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