Topic1 - Topic I: Introduction to Behavioral Economics The...

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Topic I: Introduction to Behavioral Economics The “Science” of Economics : Goal : To understand the economic outcomes that we observe in the world, and to design policies to improve economic outcomes. “Positive economics” (or “descriptive economics”): Investigating how the economy functions. “Normative economics” (or “welfare economics”): Investigating how to improve the performance of the economy. Methodology :F i rs t ,wedeve lopa theory for what we think might be driving economic outcomes. Then, we empirically test that theory. These empirical tests reveal the ways in which the theory succeeds, but also reveal the ways in which the theory fails, which in turn leads us to develop a modi
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What is “behavioral economics”? In short, behavioral economics attempts to incorporate more realistic assumptions into economics, both to better understand the behaviors we see in the world and to improve our analyses of welfare and policy. Some “standard” economic assumptions:
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This note was uploaded on 04/01/2009 for the course ECON 3240 taught by Professor Lyons during the Spring '09 term at Cornell.

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Topic1 - Topic I: Introduction to Behavioral Economics The...

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