An Introduction to Behavioral Economics

by Nick Wilkinson

In recent years there has been increasing criticism that the standard neoclassical model of economics has been unable to explain the irregularities highlighted by empirical research. This book looks at how alternative behavioral models, informed by a number of disciplines including psychology, attempt to explain these anomalies.

Genres: Economics, Nonfiction

511 pages, Paperback

First published December 26, 2007

Reviews

[Luis · Rating 4 out of 5]

I have read the first three chapters, and has been a good book. However, it really makes me think that a definitely improved textbook is needed for Behavioural Economics. The author, in my opinion, commits various flaws in pedagogy terms: first of all, is extremely annoying that always, even three or four times in the same paragraph, he mentions a topic only to say that will be treated later. The excess in citation for future topics makes you want to skip every part looking for the cited one, and like you dont do it because you would never finish reading anything, you think that you end up not reading anything. Second, its annoying the constant use of acronyms, and if you read a chapter independently from other this might be a problem. Although the acronyms are easy, the innecesarily deviate attention from the important task of learning the concepts (he uses acronyms even for reference of authors). Third, he leaves every practical illustrating example for the end of chapters: i think they would be much appreciated if read right after the relevant topic. Fourth, he proposes too little and superficial exercises. Fifht, and I am not quite sure about this one, but in textbooks I dont know if is necesarry citing authors so much: the narrative could be more straightforward, leaving citation for footnotes of appendix. Finally, to the book's worth, the end chapters resumes are extremely well done (in bullets), and for what i have seen, the topics covered are quite complete and up to date.

[Ma Ud · Rating 2 out of 5]

Interesting content but very dry reading

[Arbraxan · Rating 4 out of 5]

In 'An Introduction to Behavioral Economics' Nick Wilkinson and Matthias Klaes open the door for a student's first steps into behavioral economics, being aimed at 3rd- or 4th-year undergraduate and postgraduate students in economics.

The authors present the principles and methods of behavioral economics in a logical manner and contrast them with those of standard models. However, the exposition could be more didactic: The book contains 32 figures and 29 tables, which is scarce for a book of 500+ pages replete with models and theories, making it particularly dense for students who are more accustomed to geometric and algebraic exposition. The lack of graphical exposition is to some extent compensated by the authors' generous use of practical examples and empirical findings for illustrative purposes. Nonetheless, the book does a good job at illustrating how behavioral approaches are continuously supplementing standard models in economics, often displaying superior explanatory and predictive power than those. The authors engage convincingly in a nuanced examination of the impact of behavioral economics on related fields, staving off the temptation to oversell behavioral economics: While behavioral economics is a most valuable contribution to economics, it is not a panacea for every problem at hand; many issues in e.g. international, monetary or econometrics would benefit from behavioral economics only to a very limited degree.

The book consists of five parts: In the first part, the nature and methodology of behavioral economics are introduced. The second part explains the foundations of modern behavioral economics, exploring topics such as values, preferences and choices, beliefs, heuristics and biases, decision-making under risk and uncertainty as well as mental accounting. The third part concerns intertemporal choice, featuring the discounted utility model and a review of alternative intertemporal choice models. Fourth, behavioral game theory and social preferences deliver an account of behavioral economics' take on strategic interaction. Finally, Wilkinson and Klaes provide a summary and an outlook of behavioral economics' trajectory. The book ends with a thorough bibliography (at least I did not find any mistakes) and a less thorough index.

Overall, I liked the book: It does indeed provide an introduction to behavioral economics to economics students, requiring no prior knowledge of psychology whatsoever. Unfortunately, I did not take well to its rather verbose style of exposition, which precludes a higher rating (in all fairness, a mathematical exposition of behavioral economics might be beyond the grasp of the average junior or senior college student). Hence, I would recommend this book rather as a private reference (the bibliography is very extensive) rather than as a course textbook.

[Jeffrey · Rating 5 out of 5]

A must-read for all behavioral economics enthusiasts!