Essays on behavioural economics

Traditional economic theory assumes that individuals are self-interested. They only care about their own well-being and disregard the impact of their actions on the others. However, the assumption of selfish individuals is unable to explain a number of important phenomena and puzzles. Individuals frequently engage in actions that are costly to themselves with no apparent reward. Behavioural economics provides plausible explanations for these actions. Individuals can be “boundedly rational" (Simon, 1955, and Kahneman et al. 1982) and/or can be driven by altruistic, equity and reciprocity considerations (see for an overview Fehr and Schmidt, 2006). Over the past decade, researchers have applied behavioural economics models to the study of organisations and how contracts should be designed in the presence of non-standard preferences and asymmetric information or incomplete contracts (see for an overview of the literature Köszegi, 2014). In my current research, I try to be at the forefront of these new behavioural economics applications into traditional industrial organisation and contract theory themes. The usual prescriptions of standard models can be misleading if potential differences in the agents' preferences are overlooked. Behavioural economics can make great progress if it takes into proper accountmarket and organisational features.