This collection of research papers documents the shift from standard rational-choice models to a framework grounded in psychological reality. The editors consolidate empirical findings that challenge traditional axioms, such as the assumption of perfect self-interest and consistent temporal discounting. Key sections analyze how individuals process risk through prospect theory, the ways social preferences like fairness influence market outcomes, and the systematic biases that lead to suboptimal financial decisions. By integrating concepts like loss aversion and hyperbolic discounting into formal mathematical models, the text demonstrates that human departures from rationality are predictable and can be rigorously quantified within economic theory.
Economists, graduate students, and policy analysts use this volume as a technical reference for modernizing classical utility functions. Readers acquire a precise toolkit for predicting market behaviors that standard theory fails to explain, such as equity premium puzzles or labor supply fluctuations. The book provides the empirical evidence and modeling structures necessary to apply behavioral insights to practical fields like finance, game theory, and public policy. It functions as a foundational map for anyone needing to bridge the gap between abstract economic equilibrium and actual human choice.
Deep, outward-looking and growth-minded; a demanding read.
Best for readers like The Systems Thinker. Which reader are you?
- Published
- 2004
- Publisher
- Princeton University Press
- ISBN
- 9780691116822
- Language
- EN
