What is Behavioural Economics Like?
University of Piemonte Orientale - Department of Economics and Quantitative Methods; Erasmus University Rotterdam (EUR)
University of Piemonte Orientale
Quaderno SEMeQ Working Paper No. 22/2007
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.
Number of Pages in PDF File: 30
Keywords: Behavioural Economics, Decision-Making, Endowment Effect, Loss Aversion, Uncertainty
JEL Classification: A12, D81Accepted Paper Series
Date posted: November 7, 2007
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