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The Rise of Behavioral Economics: Richard Thaler's 'Misbehaving'

11 Pages Posted: 16 Jan 2016 Last revised: 16 Mar 2016

Cass R. Sunstein

Harvard Law School; Harvard University - Harvard Kennedy School (HKS)

Date Written: January 14, 2016

Abstract

Behavioral economics emerged in the 1980s, above all because of the creative work of Richard Thaler, exploring the relevance of the endowment effect, mental accounting, concern for fairness, and other "anomalies" from the standpoint of standard economic theory. His engaging book, "Misbehaving," offers a narrative account of how these ideas came about, and also explores some of their implications for the future. Continuing challenges include making predictions when behavioral findings cut in different directions (as, for example, where optimistic bias conflicts with availability bias); understanding the line between nudging and manipulation; and applying behavioral findings to pressing public policy challenges, such as poverty, education, terrorism, and climate change.

Suggested Citation

Sunstein, Cass R., The Rise of Behavioral Economics: Richard Thaler's 'Misbehaving' (January 14, 2016). Harvard Public Law Working Paper No. 16-01. Available at SSRN: https://ssrn.com/abstract=2715708 or http://dx.doi.org/10.2139/ssrn.2715708

Cass R. Sunstein (Contact Author)

Harvard Law School ( email )

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Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
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