Wanted: a unifying theory of behavioural economics
Some economists have an aversion to behavioural ideas — and personal biases tend to undermine the homo economicus approach
Behavioural economics has always met with a bit more resistance than it deserved. This is true even though a number of behavioural researchers have won the Nobel — Daniel Kahneman, Robert Shiller and Richard Thaler, just last year. Despite this and other forms of official recognition at the highest levels, there continue to be some economists who have an almost instinctive aversion to behavioural ideas themselves. Meanwhile, though research in behavioural economics itself continues, behavioural ideas haven’t spread — in most fields of economics, the vast majority of models continue to be based on an idealised, perfectly rational homo economicus. Meanwhile, the occasional economist still feels comfortable declaring that the behavioural paradigm is doomed. What’s the reason for the continued resistance? Part of it surely has to do with the cultural residue of the 1970s and 1980s. In those days, many economists saw their purpose as defending free markets (a few doubtless still do), and...
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