Advances in Behavioral Economics

Behavioral economics has become virtually mainstream, and is well represented in prominent journals and top economics departments. This book assembles some of the most important papers on behavioral economics published since around 1990.

The articles, which follow Colin Camerer and George Loewenstein's introduction, are by the editors, George A. Akerlof, Linda Babcock, Shlomo Benartzi, Vincent P. Crawford, Peter Diamond, Ernst Fehr, Robert H. Frank, Shane Frederick, Simon Gchter, David Genesove, Itzhak Gilboa, Uri Gneezy, Robert M. Hutchens, Daniel Kahneman, Jack L. Knetsch, David Laibson, Christopher Mayer, Terrance Odean, Ted O'Donoghue, Aldo Rustichini, David Schmeidler, Klaus M. Schmidt, Eldar Shafir, Hersh M. Shefrin, Chris Starmer, Richard H. Thaler, Amos Tversky, and Janet L. Yellen.

LIST OF CONTRIBUTORS xi
PREFACE xxi
ACKNOWLEDGMENTS xxv
PART ONE: INTRODUCTION 1
CHAPTER ONE
Behavioral Economics: Past, Present, Future by Colin F. Camerer and George Loewenstein 3
PART TWO: BASIC TOPICS 53
REFERENCE-DEPENDENCE AND LOSS-AVERSION
CHAPTER TWO
Experimental Tests of the Endowment Effect and the Coase Theorem by Daniel Kahneman, Jack L. Knetsch, and Richard H. Thaler 55
CHAPTER THREE
Mental Accounting Matters by Richard H. Thaler 75
PREFERENCES OVER RISKY AND UNCERTAIN OUTCOMES
CHAPTER FOUR
Developments in Nonexpected-Utility Theory: The Hunt for a Descriptive Theory of Choice under Risk by Chris Starmer 104
CHAPTER FIVE
Prospect Theory in the Wild: Evidence from the Field by Colin F. Camerer 148
INTERTEMPORAL CHOICE
CHAPTER SIX
Time Discounting and Time Preference: A Critical Review by Shane Frederick, George Loewenstein, and Ted O'Donoghue 162
CHAPTER SEVEN
Doing It Now or Later by Ted O'Donoghue and Matthew Rabin 223
FAIRNESS AND SOCIAL PREFERENCES
CHAPTER EIGHT
Fairness as a Constraint on Profit Seeking: Entitlements in the Market by Daniel Kahneman, Jack L. Knetsch, and Richard H. Thaler 252
CHAPTER NINE
A Theory of Fairness, Competition, and Cooperation by Ernst Fehr and Klaus M. Schmidt 271
CHAPTER TEN
Incorporating Fairness into Game Theory and Economics by Matthew Rabin 297
CHAPTER ELEVEN
Explaining Bargaining Impasse: The Role of Self-Serving Biases by Linda Babcock and George Loewenstein 326
GAME THEORY
CHAPTER TWELVE
Theory and Experiment in the Analysis of Strategic Interaction by Vincent P. Crawford 344
CHAPTER THIRTEEN
Behavioral Game Theory: Predicting Human Behavior in Strategic Situations by Colin F. Camerer 374
PART THREE: APPLICATIONS 393
MACROECONOMICS AND SAVINGS
CHAPTER FOURTEEN
Mental Accounting, Saving, and Self-Control by Hersh M. Shefrin and Richard H. Thaler 395
CHAPTER FIFTEEN
Golden Eggs and Hyperbolic Discounting by David Laibson 429
CHAPTER SIXTEEN
The Fair Wage-Effort Hypothesis and Unemployment by George A. Akerlof and Janet L. Yellen 458
CHAPTER SEVENTEEN
Money Illusion by Eldar Shafir, Peter Diamond, and Amos Tversky 483
LABOR ECONOMICS
CHAPTER EIGHTEEN
Fairness and Retaliation: The Economics of Reciprocity by Ernst Fehr and Simon G?chter 510
CHAPTER NINETEEN
Labor Supply of New York City Cab Drivers: One Day at a Time by Colin F. Camerer, Linda Babcock, George Loewenstein, and Richard H. Thaler 533
CHAPTER TWENTY
Wages, Seniority, and the Demand for Rising Consumption Profiles by Robert H. Frank and Robert M. Hutchens 548
CHAPTER TWENTY-ONE
Incentives, Punishment, and Behavior by Uri Gneezy and Aldo Rustichini 572
FINANCE
CHAPTER TWENTY-TWO
Myopic Loss-Aversion and the Equity Premium Puzzle by Shlomo Benartzi and Richard H. Thaler 590
CHAPTER TWENTY-THREE
Do Investors Trade Too Much? by Terrance Odean 606
CHAPTER TWENTY-FOUR
Loss-Aversion and Seller Behavior: Evidence from the Housing Market by David Genesove and Christopher Mayer 633
PART FOUR: NEW FOUNDATIONS 657
CHAPTER TWENTY-FIVE
Case-Based Decision Theory by Itzhak Gilboa and David Schmeidler 659
CHAPTER TWENTY-SIX
Out of Control: Visceral Influences on Behavior by George Loewenstein 689
INDEX 725