economicus is] a lightning calculator of pleasures and pains,
who oscillates like a homogenous globule of desire of happiness under
the impulse of stimuli.." Thorstein Veblen 1898
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Is Behavioral Economics Doomed?
The Ordinary and the Extraordinary
A book based on my Max
Weber Lecture at the EU Institute on May 20, 2009
Available from Open
Book Publishers and everywhere.
Those of you who have read about –
and who has not? – the current economic crisis may wonder just how
rational economic man or woman is. Behavioral economics has become the
modern rage. So is rational economic man – homo economicus – dead? Has
the economics profession moved on to recognize the true irrationality
of humankind? Read it online.
I owe an immeasurable intellectual debt to my coauthors Michele
Boldrin, Drew Fudenberg, Tom Palfrey, and Jie Zheng with whom I’ve
worked, discussed and debated the issues discussed here for many years.
Tim Sullivan encouraged me to write this up in the form of a book, and
took the time to read and comment on the draft. Rupert Gatti, economics
editor of Open Book Publishers, and his two exceptional referees have
enormously improved that original draft.
This book originated as a Max Weber lecture presented at the European
University Institute. Much of it was written while on sabbatical leave
in the Economics Department there. I am grateful to the EUI and the
Economics Department there. I also owe a special debt of gratitude to
Weber program and to Ramon Marimon, Karin Tilmans and the Weber fellows
for the invitation to speak, for a very constructive presentation, and
for encouragement and assistance in writing up the lecture.
I have presented variations of this lecture in various venues including
FUR, the NYU Experimental Workshop, and the Neuroeconomics Meetings. I
am grateful to Glenn Harrison, Guillame Frechette, and Colin Camerer
for those invitations and to them and the meeting participants for
helpful comments and criticism. Like Guillame and Colin, Rosemarie
Nagel disagrees with practically everything written here – but her
constant provocation has resulted in a much more coherent book.
I am also grateful to my daughter Milena Davidson-Levine and to my many
students both graduate and undergraduate at Washington University in
St. Louis. To the outstanding faculty there and the fine research
organization at the Federal Reserve Bank of St. Louis I am also
indebted for constant feedback and support.
Finally, I would like to thank the National Science Foundation and
grants SES-03-14713 and SES-08-51315 for financial support.