What is Behavioural Economics Like?

Lanteri, Alessandro and Carabelli, Anna (2007): What is Behavioural Economics Like?

Abstract

Behavioural 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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Behavioural Economics, Decision-Making, Endowment Effect, Loss Aversion, Uncertainty
• Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty; A - General Economics and Teaching > A1 - General Economics > A12 - Relation of Economics to Other Disciplines; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty