Behavioural Economics

  • David McFarland


In the mid-20th century psychologists in the developing field of cognitive psychology, such as Ward Edwards,1 Amos Tversky, and Daniel Kahneman began to compare their cognitive models of decision-making under risk and uncertainty with economic models of rational behaviour. In 1979, Kahneman and Tversky2 wrote an important paper that used cognitive psychology to explain various divergences of economic decision-making from neo-classical theory. They were the founders of prospect theory.


Economic Behaviour Prospect Theory Biological Base Behavioural Economic Rational Choice Theory 
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Further reading

  1. Hurley, S. and Nudds, M. (eds) (2006) Rational Animals. Oxford University Press, Oxford.Google Scholar
  2. Kalencher, T. and Winterden, M. (2011) Why we should use animals to study economic decision making: a perspective. Front. Neurosci., 5, 82.Google Scholar
  3. Sibly, R.M. and McCleery, R.H. (1983) Optimal decision rules for gulls. Anim. Behav., 33, 449–465.CrossRefGoogle Scholar
  4. Tversky, A. and Kahneman, D. (1974) Judgement under uncertainty, heuristics and biases. Sceince, 185, 4157, 1124–1131.CrossRefGoogle Scholar

Essential reading

  1. Gowdy, John M. (2010) Microeconomic Theory Old and New: A Students Guide. Stanford University Press, Stanford, CA.Google Scholar

Copyright information

© David McFarland 2016

Authors and Affiliations

  • David McFarland
    • 1
  1. 1.Balliol CollegeUniversity of OxfordUK

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