What is Behavioural Economics Like?
AbstractBehavioural Economics’ milestones, Endowment Effect and Loss Aversion, have been recognized as ‘well documented,’ ‘robust,’ and ‘important’ even by the critics. But well documented, robust, and important what? Are these stylized facts, theoretical constructs, or psychological truths? Do they express genuine preferences or are they judgement mistakes? We discuss the problems with the nature of these claims in the lights of the goals of Behavioural Economics: to improve economics’ realisticness and to be considered mainstream. We argue that, under sensible interpretations of Loss Aversion and Endowment Effect, Behavioural Economics is neither more realistic than, nor part of the mainstream.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 5667.
Date of creation: Nov 2007
Date of revision:
Behavioural Economics; Decision-Making; Endowment Effect; Loss Aversion; Uncertainty;
Find related papers by JEL classification:
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-11-17 (All new papers)
- NEP-CBE-2007-11-17 (Cognitive & Behavioural Economics)
- NEP-EVO-2007-11-17 (Evolutionary Economics)
- NEP-EXP-2007-11-17 (Experimental Economics)
- NEP-HPE-2007-11-17 (History & Philosophy of Economics)
- NEP-UPT-2007-11-17 (Utility Models & Prospect Theory)
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