ABSTRACT
The label “behavioral economics” is not particularly informative. Much of economics, after all, is concerned with understanding behaviors — of consumers, families, firms, countries — and their consequences for society. The distinguishing feature of behavioral economics is its focus on integrating insights from psychology into economic settings. The field considers, for example, how self-control problems, fairness concerns, overconfidence, and inattention matter for economic outcomes, policy, and welfare. The “behavioral” descriptor acts to underscore the emphasis on actual behaviors, particularly those that are unexpected within the standard economic framework. This first chapter motivates the study of behavioral economics and introduces the book as a guide to the subject. It begins by highlighting the broad applicability and aims of behavioral economics, followed by a brief intellectual history of psychology’s role in economics. It then provide an orientation to the book’s structure and topics. The chapter concludes with a discussion of empirical methods that readers will encounter throughout the book.
