Behavioral Economics Textbook

Overview: Over the last few decades behavioral economics has revolutionized economics. It has done so by putting the human back into economics, by recognizing that people sometimes make mistakes, care about others, and are generally not as cold and calculating as economists have traditionally liked to think they are. The results have been exciting, fascinating, and have fundamentally changed the way we look at economic behavior. This textbook covers all the main results and insights of behavioral economics at an intuitive level. Ideas such as mental accounting, prospect theory, present bias, inequality aversion, and learning are explained in detail. These ideas are also applied in diverse settings to show why behavioural economics is crucial to understanding the world around us. The book covers auctions, stock market crashes, giving to charity, health care, saving for retirement, the gender gap, addiction, and much more. The intriguing new subject of neuroscience is covered in depth, as is the role that evolution and culture may have played in shaping modern economic behavior. Consideration is also given to what makes people happy, and how we can potentially nudge people to be happier. This makes for an accessible and comprehensive text that will be of great value to students who use it.