Base Library

Contents
List of Figures
List of Tables
Preface
Acknowledgements
About the Author
1 Introduction
1.1 Economics: Neoclassical and behavioral
1.2 The origins of behavioral economics
1.3 Methods
1.4 Looking ahead
Further reading
PART 1 CHOICE UNDER CERTAINTY
2 Rational Choice under Certainty
2.1 Introduction
2.2 Preferences
2.3 Rational preferences
2.4 Indifference and strict preference
2.5 Preference orderings
2.6 Choice under certainty
2.7 Utility
2.8 Discussion
Additional exercises
Further reading
3 Decision-Making under Certainty
3.1 Introduction
3.2 Opportunity costs
3.3 Sunk costs
3.4 Menu dependence and the decoy effect
3.5 Loss aversion and the endowment effect
3.6 Anchoring and adjustment
3.7 Discussion
Additional exercises
Further reading
PART 2 JUDGMENT UNDER RISK AND UNCERTAINTY
4 Probability Judgment
4.1 Introduction
4.2 Fundamentals of probability theory
4.3 Unconditional probability
4.4 Conditional probability
4.5 Total probability and Bayes’s rule
4.6 Bayesian updating
4.7 Discussion
Additional exercises
Further reading
5 Judgment under Risk and Uncertainty
5.1 Introduction
5.2 The gambler’s fallacy
5.3 Conjunction and disjunction fallacies
5.4 Base-rate neglect
5.5 Confirmation bias
5.6 Availability
5.7 Overconfidence
5.8 Discussion
Additional exercises
Further reading
PART 3 CHOICE UNDER RISK AND UNCERTAINTY
6 Rational Choice under Risk and Uncertainty
6.1 Introduction
6.2 Uncertainty
6.3 Expected value
6.4 Expected utility
6.5 Attitudes toward risk
6.6 Discussion
Additional exercises
Further reading
7 Decision-Making under Risk and Uncertainty
7.1 Introduction
7.2 Framing effects in decision-making under risk
7.3 Bundling and mental accounting
7.4 The Allais problem and the sure-thing principle
7.5 The Ellsberg problem and ambiguity aversion
7.6 Probability weighting
7.7 Rabin’s calibration theorem
7.8 Discussion
Additional exercises
Further reading
PART 4 INTERTEMPORAL CHOICE
8 The Discounted Utility Model
8.1 Introduction
8.2 Interest rates
8.3 Exponential discounting
8.4 What is the rational delta?
8.5 Discussion
Additional exercises
Further reading
9 Intertemporal Choice
9.1 Introduction
9.2 Hyperbolic discounting
9.3 Choosing not to choose
9.4 Preferences over profiles
9.5 Misprediction and miswanting
9.6 Discussion
Additional exercises
Further reading
PART 5 STRATEGIC INTERACTION
10 Analytical Game Theory
10.1 Introduction
10.2 Nash equilibrium in pure strategies
10.3 Nash equilibrium in mixed strategies
10.4 Equilibrium refinements
10.5 Discussion
Additional exercises
Further reading
11 Behavioral Game Theory
11.1 Introduction
11.2 Social preferences: Altruism, envy, fairness, and justice
11.3 Intentions, reciprocity, and trust
11.4 Limited strategic thinking
11.5 Discussion
Additional exercises
Further reading
PART 6 CONCLUDING REMARKS
12 Behavioral Policy
12.1 Introduction
12.2 Behavioral welfare economics, libertarian paternalism, and the nudge agenda
12.3 Assessing the nudge agenda
12.4 The economics of happiness
12.5 Discussion
Further reading
13 General Discussion
Further reading
Appendix: Answer Key
Bibliography
Index