Behavioral Economics

Reading order

1. Behavioural Economics: A Very Short Introduction

   Michelle Baddeley Beginner

   A compact introduction to behavioural economics that explains how insights from psychology, sociology and neuroscience modify the standard economic account of choice. It surveys the main findings on motivation, social influence, heuristics, risk and time, and shows how they apply to macroeconomics and to public policy.

   Prerequisites: No prior economics or psychology is required.

2. Misbehaving: The Making of Behavioral Economics

   Richard H. Thaler Beginner

   A first-person account of how behavioural economics developed, written by one of its founders. Thaler recounts the anomalies in human decision making that standard theory could not explain, the experiments and arguments that gradually persuaded the profession, and the practical applications in finance, savings policy and public programmes that followed.

   Prerequisites: None; the book is written for general readers and explains the relevant economics as it goes.

3. An Introduction to Behavioral Economics

   Nick Wilkinson; Matthias Klaes Intermediate

   A survey textbook that sets the main findings of behavioural economics against the standard rational-choice model. It explains the psychological evidence behind each departure from that model, presents the formal alternatives proposed in the literature, and discusses how far these alternatives improve on standard theory.

   Prerequisites: Intermediate microeconomics is expected, and some familiarity with basic probability and algebra helps.

4. Behavioral Economics

   Edward Cartwright Intermediate

   An undergraduate textbook that presents behavioural economics as a set of models alongside the experimental and field evidence that motivates them. It moves from heuristics and mental accounting to choice under risk, time preferences, social preferences and strategic learning, and then applies the ideas to finance, health, public policy and welfare.

   Prerequisites: An intermediate microeconomics course is assumed, including basic game theory; the formal parts use algebra rather than advanced calculus.

5. Is Behavioral Economics Doomed? The Ordinary versus the Extraordinary

   David K. Levine Intermediate Open access

   Read the official free edition ↗

   An open critique of behavioural economics, comparing rational-choice and psychological theories with laboratory and real-world evidence.

   Prerequisites: Introductory microeconomics, probability and the basic language of experimental research are helpful. Familiarity with strategic interaction makes some examples easier. The book is accessible without graduate economic theory, but readers should be ready to examine a model’s predictions rather than accept or reject it because of a memorable anecdote.

6. Advances in Behavioral Economics

   Colin F. Camerer; George Loewenstein; Matthew Rabin Advanced

   An edited collection of influential journal articles in behavioural economics from roughly the 1990s onward, introduced by a long survey essay from the editors. The papers combine laboratory and field evidence with formal models, and together they map how psychological findings were brought into mainstream economic theory.

   Prerequisites: Graduate microeconomics and familiarity with reading research articles in economics are assumed.

7. The Foundations of Behavioral Economic Analysis

   Sanjit Dhami Advanced

   A single-author graduate treatise that sets out behavioural economics systematically, from decision theory to strategic interaction. Dhami presents the experimental and field evidence on each topic alongside the formal models proposed to explain it, comparing behavioural theories with the neoclassical benchmarks they modify.

   Prerequisites: Intermediate microeconomics, basic game theory and calculus are assumed; graduate microeconomics helps.