A guide to the study of how and why you really make
financial decisions
While classical economics is based on the notion that people act
with rational self-interest, many key money decisions–like
splurging on an expensive watch–can seem far from rational.
The field of behavioral economics sheds light on the many subtle
and not-so-subtle factors that contribute to our financial and
purchasing choices. And in Behavioral Economics For Dummies,
readers will learn how social and psychological factors, such as
instinctual behavior patterns, social pressure, and mental framing,
can dramatically affect our day-to-day decision-making and
financial choices.
Based on psychology and rooted in real-world examples,
Behavioral Economics For Dummies offers the sort of insights
designed to help investors avoid impulsive mistakes, companies
understand the mechanisms behind individual choices, and
governments and nonprofits make public decisions.
* A friendly introduction to the study of how and why people
really make financial decisions
* The author is a professor of behavioral and institutional
economics at Victoria University
An essential component to improving your financial
decision-making (and even to understanding current events),
Behavioral Economics For Dummies is important for just about
anyone who has a bank account and is interested in why–and
when–they spend money.
Table of Content
Introduction 1
Part I: Introducing Behavioral Economics: The Science of Making Real-World Choices 7
Chapter 1: Decoding Behavioral Economics 9
Chapter 2: Getting Real about Assumptions 19
Chapter 3: Neuroeconomics: Exploring the Brain for Economic Analysis 41
Chapter 4: Why Incentives and Markets Matter, but Money Isn’t Everything 65
Part II: Understanding Choice 89
Chapter 5: Exploring the Limits to Free Choice 91
Chapter 6: Quick and Simple Heuristics and Real-World Decision Making 107
Chapter 7: How the Framing of Choices Affects Decision Making131
Chapter 8: How Norms, Peers, History, and Culture Influence Choice 153
Chapter 9: Why Gender, Children, and Age Matter for Economic Analysis 167
Part III: Growing the Economic Pie: The Economic Importanceof Ethics, Well-Being, and Culture 181
Chapter 10: Why Smart People Pay Taxes, Recycle, and Even Breakthe Law 183
Chapter 11: Labor Supply in the Real World 197
Chapter 12: The Black Box of the Firm: Human Relationships and Productivity 215
Chapter 13: The Good Economy: How Ethical Behavior Can Grow the Economy 229
Chapter 14: Why Institutions Matter 243
Part IV: When Bubbles and Busts and Inefficiencies Are Possible: Some Behavioral Insights into the Strange World of Economic Reality 257
Chapter 15: Deciphering Behavioral Finance 259
Chapter 16: Looking into Recessions and Depressions 275
Chapter 17: The Art and Science of Happiness: Can You Be Happywithout More Money? 291
Part V: The Part of Tens 309
Chapter 18: Ten (Or So) Key Public Policy Implications of Behavioral Economics 311
Chapter 19: Ten (Or So) Experiments in Behavioral Economics321
Chapter 20: Ten Decision-Making Lessons from Behavioral Economics 333
Index 341
About the author
Morris Altman, Ph D, is a professor of behavioral economics at Victoria University of Wellington in New Zealand and a professor of economics at the University of Saskatchewan in Canada. He is on the board of the Society for the Advancement of Behavioral Economics and is a former president of that organization. He also edited the Handbook of Contemporary Behavioral Economics.
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