Questions

1. Many economists consider behavioral economics to be
an affront to the field of economics for its focus on
irrational behavior. Others consider anomalies to be so
rare as to make the study of behavioral anomalies
irrelevant. Do rational and behavioral economics work
against each other? What role might each play in
describing economic decisions? What does Occam’s
razor have to say about the relationship between
rational and behavioral economics?
2. Describe a behavior either you or a friend has engaged
in that you would describe as irrational. Why would
you consider this behavior irrational? What was the
motivation for engaging in this behavior?
3. Why has behavioral economics come to be so heavily
associated with experimental economics? Why might
econometric approaches to behavioral economics be so
challenging?
4. Describe the difference among rational, procedural
rational, and behavioral models of economic decisions.