Handbook of Contemporary Behavioral Economics: Foundations And Developments

CONTENTS......Page 7
LIST OF TABLES AND FIGURES......Page 11
INTRODUCTION......Page 15
REFERENCES......Page 22
PART 1 INSIDE THE ECONOMIC AGENT......Page 23
CHAPTER 1 INSIDE ECONOMIC MAN Behavioral Economics and Consumer Behavior......Page 25
THE NORMAL RANGE OF THE PERSONALITY CONTINUUM AND CONSUMER BEHAVIOR......Page 26
THE NEUROTIC RANGE OF THE PERSONALITY CONTINUUM AND CONSUMER BEHAVIOR......Page 31
THE PRIMITIVE RANGE OF THE PERSONALITY CONTINUUM AND CONSUMER BEHAVIOR......Page 33
THE PSYCHOTIC RANGE OF THE PERSONALITY CONTINUUM AND CONSUMER BEHAVIOR......Page 38
THE RATIONAL-IRRATIONAL DICHOTOMY IN ECONOMIC ANALYSIS......Page 39
PROBABILITY DISTRIBUTION OVER THE PERSONALITY CONTINUUM......Page 40
REFERENCES......Page 41
THE EVOLUTIONARY BACKGROUND......Page 46
THE CONFLICT SYSTEMS NEUROBEHAVIORAL MODEL......Page 48
THE MAJOR RANGES OF RECIPROCAL SOCIAL BEHAVIOR......Page 50
THE RECIPROCAL ALGORITHMS OF SOCIAL BEHAVIOR......Page 52
THE RECIPROCAL NATURE OF BEHAVIOR......Page 53
THE EQUATION OF SOCIALITY OR SOCIAL EXCHANGE......Page 54
THE EVOLUTION OF THE MARKET......Page 55
METAECONOMICS AND THE DUALITY OF MOTIVES......Page 56
THE INVISIBLE HAND IN THE STRUCTURE AND BEHAVIOR OF THE MARKETPLACE......Page 58
CONCLUSION......Page 60
APPENDIX 1: NEURAL ARCHITECTURE AND THE DUALITY OF THE MARKET......Page 61
APPENDIX 2: CALCULUS IN PRICE THEORY......Page 63
APPENDIX 3: DEMONSTRATION OF APPLICATION OF THE BASIC HOMEOSTATIC EQUATION TO ECONOMICS......Page 64
REFERENCES......Page 68
CHAPTER 3 INTUITION IN BEHAVIORAL ECONOMICS......Page 72
SOME DEFINITIONS AND EXAMPLES OF INTUITION......Page 73
THE BRAIN......Page 74
WHY WOULD BEHAVIORAL ECONOMICS BE INTERESTED IN INTUITION?......Page 75
REFERENCES......Page 85
CHAPTER 4 INTROSPECTIVE ECONOMICS Broadening Psychology’s Reach......Page 88
COMPETING RATIONALES FOR A FOCUS ON BEHAVIOR......Page 89
COGNITIVE SCIENCE TO THE RESCUE?......Page 91
A PERSONAL TALE: THE PERILS OF POSITIVISM......Page 92
CONCLUSION......Page 96
NOTES......Page 97
REFERENCES......Page 98
THE PSYCHOLOGY OF EMOTIONS......Page 100
EMOTIONS AND ECONOMIC THEORY: A CONCEPTUAL FRAMEWORK......Page 102
BRINGING EMOTIONS (BACK) INTO ECONOMICS......Page 104
CONCLUSION......Page 116
REFERENCES......Page 117
CHAPTER 6 ON THE ECONOMICS OF SUBSELVES Toward a Metaeconomics......Page 121
MOST INDIVIDUALS SEE MORE THAN ONE SUBSELF......Page 122
THE SUBSELVES IDEA IN ADAM SMITH’S TWO BOOKS......Page 123
INDIFFERENCE CURVES, TWO FIELDS OF UTILITY, AND BUDGET CONSTRAINTS......Page 125
PEACE OF MIND AS THE ULTIMATE REASON FOR CHOICE......Page 127
MODELING SELF-CONTROL, SELF-DISCIPLINE......Page 128
CONNECTING TO HOLISTIC PSYCHOLOGY......Page 129
ADDRESSING THE MICRO-TO-MACRO TRANSITION......Page 130
FINDING THE SYMBIOTIC EXPANSION PATH......Page 132
DERIVING THE EGO-EMPATHY FRONTIER......Page 133
EXAMINING THE TRADE-OFFS BETWEEN THE INTERESTS......Page 134
DEMONSTRATING TRADE-OFFS AND SYMBIOSIS......Page 135
EMPIRICAL MEASUREMENT AND TESTING......Page 136
LESS EXTREME OUTCOMES......Page 137
CRITIQUES OF METAECONOMICS AND OF MULTIPLE UTILITY THEORY GENERALLY......Page 138
NOTES......Page 139
REFERENCES......Page 141
PART 2 CONTEXT AND MODELING......Page 145
CHAPTER 7 WHAT A DIFFERENCE AN ASSUMPTION MAKES Effort Discretion, Economic Theory, and Public Policy......Page 147
BEHAVIORAL ECONOMICS......Page 148
CHOICE RATIONALITY......Page 150
EFFICIENCY WAGE THEORY AND EMPLOYMENT......Page 154
A BEHAVIORAL MODEL OF FIRM AND EFFICIENCY WAGE THEORY......Page 161
X-EFFICIENCY: A GENERAL FRAMEWORK......Page 165
A BEHAVIORAL MODEL OF THE FIRM AND X-EFFICIENCY THEORY......Page 175
SOME CONTRIBUTIONS OF A BEHAVIORAL MODEL OF THE FIRM......Page 180
CONCLUSION......Page 183
REFERENCES......Page 184
CHAPTER 8 GROUP SELECTION AND BEHAVIORAL ECONOMICS......Page 187
ASSUMPTION OF SELFISHNESS......Page 188
WHY CAN’T LEVEL 3 MODELS WORK?......Page 189
THE GENE’S-EYE VIEW AND GROUP SELECTION......Page 191
THE ROLE OF GROUP SELECTION IN FOSTERING ALTRUISM TOWARD KIN AND NONKIN......Page 194
ECONOMISTS AND THE INTELLECTUAL HISTORY OF THE GROUP SELECTION DEBATE......Page 198
CONCLUSION......Page 200
NOTES......Page 202
REFERENCES......Page 203
WHY INCORPORATE BELIEFS?......Page 205
WHAT ARE BELIEFS?......Page 207
BELIEFS AND ECONOMIC BEHAVIOR......Page 210
BELIEF SYSTEMS OF NEOCLASSICAL AND BEHAVIORAL ECONOMICS......Page 216
REFERENCES......Page 218
CHAPTER 10 RECLAIMING MORAL SENTIMENTS Behavioral Economics and the Ethical Foundations of Capitalism......Page 224
RECLAIMING MORAL SENTIMENTS......Page 226
TWO WRONG TURNS......Page 229
THE CONSEQUENCES OF TWO WRONG TURNS......Page 230
TOWARD A NEW ECONOMICS......Page 235
NOTES......Page 237
REFERENCES......Page 238
CHAPTER 11 BOUNDED RATIONALITY Two Interpretations from Psychology......Page 240
BOUNDED RATIONALITY AS IRRATIONALITY......Page 241
BOUNDED RATIONALITY AS ECOLOGICAL RATIONALITY......Page 248
CONCLUSION......Page 254
REFERENCES......Page 255
CHAPTER 12 BEHAVIORAL VERSUS NEOCLASSICAL ECONOMICS Paradigm Shift or Generalization?......Page 259
BEHAVIORALISM VERSUS NEOCLASSICISM......Page 260
THE CONNECTION......Page 262
SATISFICING AND THE ADAPTIVE TOOLBOX......Page 264
EMOTIONS, FEELINGS, NEUROBIOLOGY, AND BEHAVIOR......Page 266
CONCLUSION......Page 274
NOTES......Page 276
REFERENCES......Page 278
ORGANIZATIONAL CAPITAL BASICS......Page 279
ORGANIZATIONAL CAPITAL’S ROLE IN THE FIRM......Page 280
PERSONAL CAPITAL BASICS......Page 287
PERSONAL CAPITAL’S ROLE IN THE FIRM......Page 289
INTANGIBLE CAPITAL AND ECONOMIC GROWTH......Page 290
THE GOVERNMENT ROLE WITH RESPECT TO ORGANIZATIONAL AND PERSONAL CAPITAL: INDUSTRIAL POLICY......Page 293
NOTE......Page 294
REFERENCES......Page 295
PART 3 DECISION MAKING......Page 297
CHAPTER 14 HOW TO DO AS WELL AS YOU CAN The Psychology of Economic Behavior and Behavioral Ecology......Page 299
PSYCHOLOGY AND ECONOMICS, PSYCHOLOGY AND ECOLOGY......Page 301
THE PITFALL OF THE RATIONALITY QUESTION......Page 302
ALTERNATIVE FRAMEWORKS FOR ECONOMIC PSYCHOLOGY......Page 304
THE PSYCHOLOGY OF FORAGING......Page 306
HOARDING AND SAVING......Page 309
PSYCHOLOGY AND MONEY......Page 312
CLOSING THE TRIANGLE: ECOLOGICAL AND ENVIRONMENTAL ECONOMICS......Page 314
CONCLUSION......Page 315
REFERENCES......Page 316
THE CONCEPT OF TIME PREFERENCE......Page 319
EMPIRICAL RESEARCH ON TIME PREFERENCE......Page 321
TIME PREFERENCES AND SAVING BEHAVIOR......Page 327
SELF-CONTROL......Page 328
BEHAVIORAL SAVING MODELS......Page 330
CHALLENGES FOR FUTURE RESEARCH......Page 336
THE FORMATION OF TIME PREFERENCE AND SELF-CONTROL......Page 340
NOTES......Page 341
REFERENCES......Page 342
CHAPTER 16 RATIONAL CHOICE THEORY VERSUS CULTURAL THEORY On Taste and Social Capital......Page 348
THE SOCIAL THEORY BACKGROUND......Page 349
BOURDIEU’S SOCIAL THEORY......Page 351
BECKER’S SOCIAL ECONOMICS......Page 354
THE SOCIAL PSYCHOLOGY OF SOCIAL INFLUENCE......Page 355
CONCLUSION......Page 359
REFERENCES......Page 360
CHAPTER 17 DELIBERATION COST AS A FOUNDATION FOR BEHAVIORAL ECONOMICS......Page 362
NONBEHAVIORAL CHOICE THEORY......Page 363
BEHAVIORAL CHOICE THEORY......Page 364
TRANSACTIONS COSTS AND DELIBERATION COSTS: A PARALLEL......Page 366
MODELS OF BOUNDED RATIONALITY......Page 367
EXPLAINING OBSERVED DECISION PROCESSES AS RESPONSES TO DELIBERATION COST......Page 372
DELIBERATION COST, ORGANIZATION, AND SOCIAL INTERACTION......Page 374
CONCLUSION......Page 375
REFERENCES......Page 376
CHAPTER 18 IN-DEPTH INTERVIEWS AS A MEANS OF UNDERSTANDING ECONOMIC REASONING Decision Making as Explained by Business Leaders and Business Economists......Page 378
THE BLINDER PROJECT ON PRICE RIGIDITY......Page 379
BROMILEY’S INTERVIEWS WITH A SMALL NUMBER OF ENTERPRISES......Page 380
BROMILEY’S INTERVIEWS WITH A SMALL NUMBER OF ENTERPRISES......Page 382
THE STUDIES OF TRUMAN BEWLEY......Page 384
THE SCHWARTZ AND MAITAL STUDIES......Page 390
CONCLUSION......Page 395
REFERENCES......Page 396
PART 4 EXPERIMENTS AND IMPLICATIONS......Page 399
CHAPTER 19 CLASSROOM EXPERIMENTS IN BEHAVIORAL ECONOMICS......Page 401
MOBILE LABORATORY ON ECONOMICS......Page 402
ENDOWMENT EFFECT......Page 403
PRISONER’S DILEMMA......Page 406
DUAL PROCESSING AND EVALUATION OF GOODS......Page 410
SUBJECTIVE DISCOUNTING......Page 413
EXPERIMENTS ON THE EFFECT OF SITUATION ON CONSUMER BEHAVIOR......Page 414
METHODOLOGICAL CONSIDERATIONS......Page 416
CONCLUSION......Page 422
REFERENCES......Page 423
CHAPTER 20 A BEHAVIORAL APPROACH TO DISTRIBUTION AND BARGAINING......Page 427
EXPERIMENTAL RESULTS IN DISTRIBUTION GAMES......Page 428
EXPERIMENTAL RESULTS IN (ALTERNATING OFFER) BARGAINING GAMES......Page 432
CHARACTERISTIC FUNCTION EXPERIMENTS......Page 434
CONCLUSION......Page 435
REFERENCES......Page 439
THE CONTEXT OF GAINS AND THE CONTEXT OF LOSSES......Page 445
PATTERNS OF GAINS AND LOSSES......Page 450
OTHER CONTEXT VARIABLES: VALUATIONS IN SECOND- AND NINTH-PRICE VICKREY AUCTIONS......Page 453
OTHER CONTEXT-DEPENDENT VALUATIONS......Page 455
DEGREES OF CONTEXT DEPENDENCE......Page 456
REFERENCES......Page 460
EXPERIMENTAL METHODS IN ECONOMICS......Page 463
EXPERIMENTAL VALIDITY......Page 464
REALISM......Page 469
CONCLUSION......Page 472
REFERENCES......Page 473
PART 5 LABOR-RELATED ISSUES......Page 477
CHAPTER 23 BEHAVIORAL LABOR ECONOMICS......Page 479
EFFORT......Page 480
LABOR SUPPLY, INCENTIVES, AND TAXES......Page 486
WORKER HETEROGENEITY......Page 489
SOCIAL NORMS AND TRUST......Page 491
LABOR CONTRACTS AND THE STRUCTURE OF WORK......Page 492
REFERENCES......Page 495
CHAPTER 24 HOURS OF LABOR SUPPLY A More Flexible Approach......Page 501
CONVENTIONAL MODELS OF HOURS OF LABOR SUPPLY......Page 502
THE NEED TO AMEND THE MODEL OF LABOR SUPPLY AND UTILITY......Page 503
RISING IMPORTANCE OF WORK SCHEDULING......Page 504
THREE DEGREES OF FLEXIBILITY: FROM THE TIMING TO DURATION DIMENSIONS OF HOURS......Page 505
A SIMPLE MODEL OF SCHEDULE FLEXIBILITY AND UTILITY......Page 506
THIRD-DEGREE FLEXIBILITY: ADJUSTING DURATION OF HOURS AND OVEREMPLOYMENT......Page 507
ENDOGENOUS LABOR SUPPLY AND THE DYNAMICS OF OVEREMPLOYMENT......Page 509
INDIVIDUAL LABOR SUPPLY SHIFTERS: WHY PREFERRED WORK HOURS MAY RISE......Page 510
CONCLUSION......Page 512
REFERENCES......Page 513
PART 6 GENDER AND DECISION MAKING......Page 519
CHAPTER 25 CHICKS, HAWKS, AND PATRIARCHAL INSTITUTIONS......Page 521
A THEORETICAL MÉNAGE À TROIS......Page 522
GENDER GAMES......Page 525
INDIVIDUAL BARGAINING OVER QUANTITY/QUALITY OF OFFSPRING......Page 526
COLLECTIVE BARGAINING OVER MARRIAGE RULES......Page 529
GENDER INEQUALITY AND MILITARY AGGRESSION......Page 533
CONCLUSION......Page 535
REFERENCES......Page 536
ECONOMIC DECISIONS IN PRIVATE HOUSEHOLDS......Page 539
INFLUENCE IN ECONOMIC DECISIONS......Page 544
DECISION RESULTS......Page 552
REFERENCES......Page 556
PART 7 LIFE AND DEATH......Page 563
CHAPTER 27 A PROLEGOMENON TO BEHAVIORAL ECONOMIC STUDIES OF SUICIDE......Page 565
ECONOMIC MODELS OF SUICIDAL BEHAVIOR AND SUICIDE PREVENTION......Page 568
CONCLUSION......Page 576
NOTES......Page 577
REFERENCES......Page 578
RATIONAL HARMFUL ADDICTION......Page 582
RATIONAL HARMFUL EATING......Page 590
RATIONAL UNRESTRAINED SEXUAL ACTIVITY......Page 594
RATIONAL DELAY OF MEDICAL DIAGNOSIS......Page 596
RATIONAL MENTAL DISORDER......Page 599
NOTES......Page 604
REFERENCES......Page 605
PART 8 TAXATION, ETHICAL INVESTMENT, AND TIPPING......Page 609
A BRIEF HISTORY OF THE ECONOMICS OF TAXATION......Page 611
NEOCLASSICAL THEORY AND BEHAVIORAL ECONOMICS......Page 612
TAXPAYER COMPLIANCE AND ECONOMIC RATIONALITY......Page 613
THE DEVELOPMENT OF BEHAVIORAL MODELS......Page 614
BEHAVIORAL ECONOMICS AND THE PURPOSES OF TAXATION......Page 615
THE BEHAVIORAL CONTRIBUTION TO THE DEFINITION OF TAX COMPLIANCE......Page 617
APPLICATIONS OF BEHAVIORAL THEORY......Page 618
FUTURE RESEARCH......Page 619
REFERENCES......Page 620
CHAPTER 30 ETHICAL INVESTING Where Are We Now?......Page 624
HISTORY, AUTHENTICITY, AND GROWTH OF “ETHICALS”......Page 625
ETHICAL SCREENS: ARE THEY ABLE TO MAKE A DIFFERENCE?......Page 627
THE DECISION TO INVEST ETHICALLY: INFERRING MOTIVATION FROM BEHAVIOR......Page 632
ETHICAL INVESTING: SOME TESTABLE PREDICTIONS......Page 638
CONCLUSION......Page 642
REFERENCES......Page 644
CHAPTER 31 TIPPING IN RESTAURANTS AND AROUND THE GLOBE An Interdisciplinary Review......Page 648
DETERMINANTS AND PREDICTORS OF RESTAURANT TIPPING......Page 649
PREDICTORS OF NATIONAL DIFFERENCES IN TIPPING NORMS......Page 653
PUBLIC POLICY ISSUES CONCERNING TIPPING......Page 659
CONCLUSION......Page 661
REFERENCES......Page 662
PART 9 DEVELOPMENT, BEHAVIORAL LAW, AND MONEY......Page 667
CHAPTER 32 ECONOMIC DEVELOPMENT, EQUALITY, INCOME DISTRIBUTION, AND ETHICS......Page 669
EQUALITY AS AN ETHICAL END OR MEANS?......Page 670
INTERRELATIONSHIP BETWEEN EQUALITY (INEQUALITY) AND SOCIOECONOMIC VARIABLES......Page 671
IMPACT OF INEQUALITY ON EDUCATION, HEALTH, AND CRIME......Page 674
HOW UNEQUAL ARE GLOBAL AND NATIONAL INCOME DISTRIBUTIONS?......Page 676
CONCLUSION......Page 678
REFERENCES......Page 679
CHAPTER 33 INSUFFICIENT SOCIAL CAPITAL AND ECONOMIC UNDERDEVELOPMENT......Page 681
EXAGGERATING THE ROLE OF PHYSICAL CAPITAL IN EARLY DEVELOPMENT LITERATURE......Page 682
HUMAN CAPITAL AND DEVELOPMENT ECONOMICS......Page 683
SOCIAL CAPITAL AS CAPITAL......Page 684
INSUFFICIENT SOCIAL CAPITAL: AN OBSTACLE TO DEVELOPMENT......Page 685
MARKET VERSUS GOVERNMENT FAILURES IN DEVELOPMENT ECONOMICS LITERATURE......Page 687
SOCIAL CAPITAL: A COMPLEMENT OF MARKETS AND GOVERNMENTS......Page 688
CONCLUSION......Page 690
REFERENCES......Page 691
RATIONAL CHOICE THEORY AND CONVENTIONAL LAW AND ECONOMICS......Page 693
BEHAVIORAL LAW AND ECONOMICS......Page 698
A CAUTIONARY NOTE......Page 705
NOTES......Page 707
REFERENCES......Page 709
CHAPTER 35 ELEMENTS OF BEHAVIORAL MONETARY ECONOMICS......Page 711
WHY IS THERE MONETARY EXCHANGE AND WHAT FUNCTIONS AS MONEY?......Page 712
WHY AND HOW DOES MONEY AFFECT THE ECONOMY?......Page 713
MONEY SUPPLY AND MONETARY POLICY......Page 720
CONCLUSION......Page 722
NOTES......Page 723
REFERENCES......Page 724
CHAPTER 36 BEHAVIORAL FINANCE......Page 728
BIASED FORECASTS......Page 731
EMOTIONS IN INVESTMENT JUDGMENT AND IN PORTFOLIO CHOICE......Page 736
BACKGROUND MOOD AND INVESTMENT CHOICE......Page 737
EXPERIENCED EMOTIONS IN THE JUDGMENT OF FINANCIAL RISK AND RETURN......Page 739
PREFERENCES......Page 742
CONCLUSION......Page 747
REFERENCES......Page 748
ABOUT THE EDITOR AND CONTRIBUTORS......Page 751
INDEX......Page 761