ABSTRACT
This chapter discusses how behavioural economics responds to the challenges of digital labour economics. Behavioural economics complements mainstream economics by providing a more realistic framework in the study of human behaviour and decision-making. This research draws on psychological insights into human nature and often builds conclusions based on experimental studies. Behavioural labour economics is a rapidly developing subfield of economics. It explains people’s behaviour in the labour market and the workplace, allows a better understanding of the motives behind employees’ behaviour and choices and studies the relationship between employees and employers. Its findings can also be applied to the challenges of the digital economy as it affects the labour market. The chapter presents the main assumptions and concepts of behavioural economics. It then discusses the links between behavioural economics, labour economics and the challenges posed by the digital economy. This is followed by an explanation of how features of human nature and its constraints, such as bounded rationality, bounded self-interest and bounded willpower, shape behaviour and relationships in the labour market and in organisations. It then discusses how behavioural economics can solve digital labour economics problems, with nudging as a behavioural toolkit receiving particular attention. The final section looks at the applicability of behavioural economics to the transforming labour market.
