Behavioral Economics and Institutional Innovation
Robert J. Shiller
Yale University - Cowles Foundation; National Bureau of Economic Research (NBER); Yale University - International Center for Finance
Yale ICF Working Paper No. 04-50; Cowles Foundation Discussion Paper No. 1499
Behavioral economics has played a fundamental role historically in innovation in economic institutions, even long before behavioral economics was recognized as a discipline. Examples from history, notably that of the invention of workers' compensation, illustrate this point. Though scholarly discussion develops over decades, actual innovation tends to occur episodically, particularly at times of economic crisis. Fortunately, some of the major professional societies, the Verein fur Sozialpolitik, the American Economic Association and their successors, have managed to keep a broad discourse going, involving a variety of research methods including some that may be described today as behavioral economics, thereby maintaining an environment friendly to institutional innovation. Further, the broad expansion of behavioral economics that is going on today can be expected to yield even more such important institutional innovations.
Number of Pages in PDF File: 24
Keywords: Economics innovation, invention, psychological economics, institutional economics, social insurance, workers'compensation, American Economic Association, Germany, Verein fur Sozialpolitik
JEL Classification: B41
Date posted: February 22, 2005
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