Psychology And Economics: Evidence From The Field

The research in Psychology and Economics (a.k.a. Behavioral Economics) suggests that individuals deviate from the standard model in three respects: non-standard preferences; non-standard beliefs; and non-standard decision-making. In this paper, the author surveys the empirical evidence from the field on these three classes of deviations. The evidence covers a number of applications, from consumption to finance, from crime to voting, from giving to labor supply. In the class of non-standard preferences, the author discusses time preferences (self-control problems), risk preferences (reference dependence), and social preferences.