What to Conclude from Psychological Experiments: The Contrasting Cases of Experimental and Behavioral Economics

Floris Heukelom

History of Political Economy, 2011, vol. 43, issue 4, pages 649-681

Abstract: To understand the relationship between experimental and behavioral economics, we need to go back to the late 1970s and early 1980s. In the 1970s, psychologists began conducting new kinds of experiments, the results of which seemed to falsify the assumption of rational individual behavior. This compelled experimental economists to stake out a position for the economics discipline regarding the results. Much to their surprise, their experiments corroborated the results of the psychologists. This led them to completely discard preference theory but at the same time to emphasize the role of the market as the mechanism that rationalizes individual behavior. An initially diverse and unorganized group of financial and other economists drew very different conclusions from these same experimental results. They saw them as proof of observed anomalies in financial markets and hailed Daniel Kahneman and Amos Tversky's prospect theory as the most important candidate for replacing the traditional microeconomic model of human behavior.

Keywords: experimental economics; behavioral economics (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://hope.dukejournals.org/content/43/4/649.full.pdf+html link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:hop:hopeec:v:43:y:2011:i:4:p:649-681

Access Statistics for this article

History of Political Economy is edited by Kevin D. Hoover

More articles in History of Political Economy from Duke University Press
Address: Duke University Press 905 W. Main Street, Suite 18B Durham, NC 27701
Series data maintained by Center for the History of Political Economy Webmaster ().