Behavioral Economics: Past, Present, and Future
Consolidated by the award of the 2017 Economics Nobel Prize to behavioral economist Richard Thaler, behavioral economics is enjoying a golden age. It combines a diverse range of insights from across the social sciences—including economists’ powerful analytical tools alongside rich evidence about real human behavior from other social sciences—especially psychology and sociology. This article explores the evolution of behavioral economics and some key behavioral insights about incentives and motivations; social influences—including social learning, peer pressure, and group-think; heuristics and biases; decision-making under risk and uncertainty; present bias and procrastination; and nudging policy tools. These all illustrate how behavioral economics provides businesses and policy makers with a rich understanding of how real people think, choose, and decide.