Behavioral Economics For Dummies

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.

A guide to the study of how and why you really makefinancial decisionsWhile classical economics is based on the notion that people actwith rational self-interest, many key money decisions--likesplurging on an expensive watch--can seem far from rational.The field of behavioral economics sheds light on the many subtleand not-so-subtle factors that contribute to our financial andpurchasing choices. And in Behavioral Economics For Dummiesreaders will learn how social and psychological factors, such asinstinctual behavior patterns, social pressure, and mental framingcan dramatically affect our day-to-day decision-making andfinancial choices.Based on psychology and rooted in real-world examplesBehavioral Economics For Dummies offers the sort of insightsdesigned to help investors avoid impulsive mistakes, companiesunderstand the mechanisms behind individual choices, andgovernments and nonprofits make public decisions.* A friendly introduction to the study of how and why peoplereally make financial decisions* The author is a professor of behavioral and institutionaleconomics at Victoria UniversityAn essential component to improving your financialdecision-making (and even to understanding current events)Behavioral Economics For Dummies is important for just aboutanyone who has a bank account and is interested in why--andwhen--they spend money.

Introduction 1Part I: Introducing Behavioral Economics: The Science ofMaking Real-World Choices 7Chapter 1: Decoding Behavioral Economics 9Chapter 2: Getting Real about Assumptions 19Chapter 3: Neuroeconomics: Exploring the Brain for EconomicAnalysis 41Chapter 4: Why Incentives and Markets Matter, but MoneyIsn't Everything 65Part II: Understanding Choice 89Chapter 5: Exploring the Limits to Free Choice 91Chapter 6: Quick and Simple Heuristics and Real-World DecisionMaking 107Chapter 7: How the Framing of Choices Affects Decision Making131Chapter 8: How Norms, Peers, History, and Culture InfluenceChoice 153Chapter 9: Why Gender, Children, and Age Matter for EconomicAnalysis 167Part III: Growing the Economic Pie: The Economic Importanceof Ethics, Well-Being, and Culture 181Chapter 10: Why Smart People Pay Taxes, Recycle, and Even Breakthe Law 183Chapter 11: Labor Supply in the Real World 197Chapter 12: The Black Box of the Firm: Human Relationships andProductivity 215Chapter 13: The Good Economy: How Ethical Behavior Can Grow theEconomy 229Chapter 14: Why Institutions Matter 243Part IV: When Bubbles and Busts and Inefficiencies ArePossible: Some Behavioral Insights into the Strange World ofEconomic Reality 257Chapter 15: Deciphering Behavioral Finance 259Chapter 16: Looking into Recessions and Depressions 275Chapter 17: The Art and Science of Happiness: Can You Be Happywithout More Money? 291Part V: The Part of Tens 309Chapter 18: Ten (Or So) Key Public Policy Implications ofBehavioral Economics 311Chapter 19: Ten (Or So) Experiments in Behavioral Economics321Chapter 20: Ten Decision-Making Lessons from BehavioralEconomics 333Index 341