Advanced Search
MyIDEAS: Login to save this paper or follow this series

Psychology and the Market

Contents:

Author Info

  • Edward L. Glaeser

Abstract

Prospect theory, loss aversion, mental accounts, hyperbolic discounting, cues, and the endowment effect can all be seen as examples of situationalism -- the view that people isolate decisions and overweight immediate aspects of the situation relative to longer term concerns. But outside of the laboratory, emotionally-powerful situational factors -- frames, social influence, mental accounts -- are almost always endogenous and often the result of self-interested entrepreneurs. As such, laboratory work and, indeed, psychology more generally, gives us little guidance as to market outcomes. Economics provides a stronger basis for understanding the supply of emotionally-relevant situational variables. Paradoxically situationalism actually increases the relative importance of economics.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.nber.org/papers/w10203.pdf
Download Restriction: no

Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10203.

as in new window
Length:
Date of creation: Jan 2004
Date of revision:
Publication status: published as Glaeser, Edward L. "Psychology And The Market," American Economic Review, 2004, v94(2,May), 408-413.
Handle: RePEc:nbr:nberwo:10203

Note: LE AP PE
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Email:
Web page: http://www.nber.org
More information through EDIRC

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Ernst Fehr & Simon Gaechter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," CESifo Working Paper Series 336, CESifo Group Munich.
  2. Akerlof, George A & Yellen, Janet L, 1985. "Can Small Deviations from Rationality Make Significant Differences to Economic Equilibria?," American Economic Review, American Economic Association, American Economic Association, vol. 75(4), pages 708-20, September.
  3. Colin Camerer & Teck-Hua Ho & Juin Kuan Chong, 2003. "A cognitive hierarchy theory of one-shot games: Some preliminary results," Levine's Bibliography 506439000000000495, UCLA Department of Economics.
  4. Laibson, David I., 2000. "A Cue-Theory of Consumption," Scholarly Articles 4481496, Harvard University Department of Economics.
  5. Jean Tirole & Roland Benabou, 2004. "Belief in a Just World and Redistributive Politics," 2004 Meeting Papers, Society for Economic Dynamics 15, Society for Economic Dynamics.
  6. Bruce Sacerdote & Edward L. Glaeser, 2001. "Education and Religion," NBER Working Papers 8080, National Bureau of Economic Research, Inc.
  7. Sendhil Mullainathan & Andrei Shleifer, 2005. "The Market for News," American Economic Review, American Economic Association, American Economic Association, vol. 95(4), pages 1031-1053, September.
  8. Henry Farber, 2003. "Is Tomorrow Another Day? The Labor Supply of New York Cab Drivers," NBER Working Papers 9706, National Bureau of Economic Research, Inc.
  9. Edward L. Glaeser, 2005. "The Political Economy of Hatred," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 120(1), pages 45-86, January.
  10. Alberto Alesina & Edward Glaeser & Bruce Sacerdote, 2001. "Why Doesn't the US Have a European-Style Welfare System?," NBER Working Papers 8524, National Bureau of Economic Research, Inc.
  11. Thaler, Richard H & Shefrin, H M, 1981. "An Economic Theory of Self-Control," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 89(2), pages 392-406, April.
  12. Stefano Della Vigna & Ulrike Malmendier, 2004. "Contract Design and Self-control: Theory and Evidence," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 119(2), pages 353-402, May.
  13. De Long, J. Bradford & Shleifer, Andrei & Summers, Lawrence H. & Waldmann, Robert J., 1990. "Noise Trader Risk in Financial Markets," Scholarly Articles 3725552, Harvard University Department of Economics.
  14. Andrei Shleifer ad Robert W. Vishny, 1995. "The Limits of Arbitrage," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1725, Harvard - Institute of Economic Research.
  15. Alberto Alesina & Edward Glaeser & Bruce Sacerdote, 2001. "Why Doesn't The US Have a European-Style Welfare State?," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1933, Harvard - Institute of Economic Research.
  16. Faruk Gul & Wolfgang Pesendorfer, 2001. "Temptation and Self-Control," Econometrica, Econometric Society, Econometric Society, vol. 69(6), pages 1403-1435, November.
  17. Brunnermeier, Markus K & Parker, Jonathan A, 2004. "Optimal Expectation," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4656, C.E.P.R. Discussion Papers.
  18. Rabin, Matthew, 2000. "Risk Aversion and Expected-Utility Theory: A Calibration Theorem," Department of Economics, Working Paper Series, Department of Economics, Institute for Business and Economic Research, UC Berkeley qt731230f8, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  19. Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
  20. Sushil Bikhchandani & David Hirshleifer & Ivo Welch, 2010. "A theory of Fads, Fashion, Custom and cultural change as informational Cascades," Levine's Working Paper Archive 1193, David K. Levine.
  21. Nicholas Barberis & Ming Huang & Richard Thaler, 2003. "Individual Preferences, Monetary Gambles and the Equity Premium," NBER Working Papers 9997, National Bureau of Economic Research, Inc.
  22. Nicholas Barberis & Ming Huang & Tano Santos, 2001. "Prospect Theory And Asset Prices," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 116(1), pages 1-53, February.
  23. Paul M. Romer, 2000. "Thinking and Feeling," American Economic Review, American Economic Association, American Economic Association, vol. 90(2), pages 439-443, May.
  24. Edward L. Glaeser, 2002. "The Political Economy of Hatred," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1970, Harvard - Institute of Economic Research.
  25. Laibson, David I., 1997. "Golden Eggs and Hyperbolic Discounting," Scholarly Articles 4481499, Harvard University Department of Economics.
  26. Barberis, Nicholas & Shleifer, Andrei & Vishny, Robert, 1998. "A model of investor sentiment," Journal of Financial Economics, Elsevier, Elsevier, vol. 49(3), pages 307-343, September.
  27. Russell, Thomas & Thaler, Richard, 1985. "The Relevance of Quasi Rationality in Competitive Markets," American Economic Review, American Economic Association, American Economic Association, vol. 75(5), pages 1071-82, December.
  28. Dan Ariely & George Loewenstein & Drazen Prelec, 2003. ""Coherent Arbitrariness": Stable Demand Curves Without Stable Preferences," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 118(1), pages 73-105, February.
  29. Jose A. Scheinkman & Wei Xiong, 2003. "Overconfidence and Speculative Bubbles," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 111(6), pages 1183-1219, December.
  30. Camerer, Colin & Babcock, Linda & Loewenstein, George & Thaler, Richard, 1996. "Labor Supply of New York City Cab Drivers: One Day At A time," Working Papers, California Institute of Technology, Division of the Humanities and Social Sciences 960, California Institute of Technology, Division of the Humanities and Social Sciences.
  31. Kahneman, Daniel & Wakker, Peter P & Sarin, Rakesh, 1997. "Back to Bentham? Explorations of Experienced Utility," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(2), pages 375-405, May.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Edward L. Glaeser & Cass R. Sunstein, 2007. "Extremism and Social Learning," NBER Working Papers 13687, National Bureau of Economic Research, Inc.
  2. Amanor-Boadu, Vincent, 2008. "On the Development of an Ethical Demand Theory," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 6236, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  3. Adeline Delavande & Basit Zafar, 2012. "How deeply held are anti-American attitudes among Pakistani youth? Evidence using experimental variation in information," Staff Reports, Federal Reserve Bank of New York 558, Federal Reserve Bank of New York.
  4. Gollier, Christian, 2005. "Optimal Illusions and Decisions under Risk," IDEI Working Papers, Institut d'Économie Industrielle (IDEI), Toulouse 340, Institut d'Économie Industrielle (IDEI), Toulouse.
  5. Berggren, Niclas, 2011. "Time for behavioral political economy? An analysis of articles in behavioral economics," Ratio Working Papers, The Ratio Institute 166, The Ratio Institute.
  6. Christine Jolls & Cass R. Sunstein, 2005. "Debiasing through Law," NBER Working Papers 11738, National Bureau of Economic Research, Inc.
  7. Andy Dickerson & Francis Green, 2009. "Fears and realisations of employment insecurity," Working Papers, The University of Sheffield, Department of Economics 2009016, The University of Sheffield, Department of Economics, revised Nov 2009.
  8. Berliant, Marcus, 2009. "Misbehavioral urban economics," MPRA Paper 14140, University Library of Munich, Germany.
  9. Edward L. Glaeser & Bryce A. Ward, 2005. "Myths and Realities of American Political Geography," NBER Working Papers 11857, National Bureau of Economic Research, Inc.
  10. Matthew A. Gentzkow & Jesse M. Shapiro, 2004. "Media, Education, and anti-Americanism in the Muslim World," Microeconomics, EconWPA 0402005, EconWPA.
  11. Bucks, Brian & Pence, Karen, 2008. "Do borrowers know their mortgage terms?," Journal of Urban Economics, Elsevier, vol. 64(2), pages 218-233, September.
  12. Matthew Gentzkow & Jesse Shapiro, 2005. "Media Bias and Reputation," NBER Working Papers 11664, National Bureau of Economic Research, Inc.
  13. Burnham, Terence C. & Cesarini, David & Wallace, Björn & Johannesson, Magnus & Lichtenstein, Paul, 2007. "Billiards and Brains: Cognitive Ability and Behavior in a p-Beauty Contest," Working Paper Series in Economics and Finance 684, Stockholm School of Economics.
  14. Gollier, Christian, 2007. "Optimal expectations with complete markets," IDEI Working Papers, Institut d'Économie Industrielle (IDEI), Toulouse 463, Institut d'Économie Industrielle (IDEI), Toulouse.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:10203. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.