Behavioral economics has become an important part of the economics profession. As a subfield, it tries to make sense of persistent violations of the standard model for economics. The major classes of violations involve social preferences (taking the well-being of others into account), time discounting (inconsistencies in valuing present and future commodities), and context (the effects of framing). Other violations involve well-known psychological heuristics such as overconfidence, constraints on strategic reasoning, emotions, and status differentials. These concepts are discussed in separate sections, and key experimental and empirical studies are noted.


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  • Article Type: Review Article
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