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The Behavioral Economics Viewpoint Comparison Between Kehneman The Winner Of The Nobel Economics Prize And Rabin The Winner Of The John Bates Clark Medal

Posted on:2009-09-30Degree:MasterType:Thesis
Country:ChinaCandidate:X H ZhouFull Text:PDF
GTID:2189360245995098Subject:Western economics
Abstract/Summary:PDF Full Text Request
The Nobel Prize in Economics is the highest award in economics all over the world. In 2002, The Nobel committee awarded the prize to Daniel Kahneman who is the Eugene Higgins Professor of Psychology of Princeton University and Professor of Public Affairs of Woodrow Wilson School,and Vernon Smith who is the professor of the law and economics, a research scholar in the Interdisciplinary Center for Economic Science, and the fellow of the Mercatus Center, citing their contributions to the foundations of the behavioral and experimental economics. John Bates Clark Medal which is called"the young Nobel Prize in Eonomics " is regarded as the important indicator of the Nobel Prize. In 2001, Mathew Rabin won this prize.This was the first time that the economist in behavior economics won this honor. With these magnificent awards in economics, people Was encourage to do more researches in the field of behavioral economics.The behavioral economics is the science which uses the behavioral science theory and study the rule of behavior of individuals and groups in economy. Although as an emerging discipline, both the definition and the classification of the behavioral economics discipline were not complete and unified yet, still was incomplete, also was not unified, many people believe that the behavioral economics is one economic branch which focuses on the economical behavior and phenomena. Behavioral economics is a development rather than a revolution of the Neoclassical economics.The Royal Swedish Academy Science awarded the Nobel Prize in Economics to Daniel Kahneman "for having integrated insights from psychological research into economic science , especially concerning human judgment and decision-making under uncertainty " . Daniel Kahneman and Amos Tversky called their studies of how people judgment and decision-making under uncertainty.They had proven that humanity's actual decision-making would systematically deviate the standard economic theory' logical forecast. Kahneman and Tversky founded the " prospect theory" which becames the basic theory in behavioral economics research, they have their own views in the frame and the psychological account as well as in the decision -making. In their opinion, economic world should not monopolize by the rational decision-making, but should be constituted of the rational decision-making and the irrational decision-making. Under uncertainty condition, each person who faces the complex scene and question can adopt the shortcut or apply partial information on the decision-making, a structure and the continuous process, thus the irrationality of decision-making is a normal state existence.Rabin's winning John Bates Clark Medal could be attributed to the comparing, summarizing and concluding for human behavior observed in different environments, to some extent. Rabin's research concentrated On the law of small numbers, lagging and self-control, risk aversion and valuation for gain and loss, as well as projection bias and irrational choice. Rabin introduced the factor of human psychological behavior to the economic analysis model, explaining the human economic bahavior's motive as not only self-interest, but also part of emotion, conception-leading and social aim; it occurred Only when the self-restriction, delay and preference reversal appeared the self-restriction the bahavior like delaying and preference reversal.The differences between Kehneman's and Rabin's behavioral economic theory can be seen from the research of the issues such as modification of classical theory, law of small numbers, fair issue and happiness and enjoyment. Through comparison, it is perceived that Kehneman and Rabin use the psychological researching method to modify the classical economics study, opening a new area of economics research. With the experimental tools, they challenged the advantageous economics from the aspect of human behavior, and discovered people's irrational side under the uncertain condition. Their research was not to seek the mistakes in economics theory,but practically to improve the economics theory with their foundations .In addition, the hypothesis of economics was forced on the approach of human behavior in realistic world, While the interpretation ability of the economics to the realistic world was boosted. Thus Kahneman and Rabin's research had a Significant influence on the development of behavioral economics, and they led the economics study to the reality, And draw attention to people's lives. Their research will bring in evolutionary leap for the research of economics and relative subjects. Times requires the scholars concentrate on the realistic life.
Keywords/Search Tags:Daniel Kahneman, Matthew Rabin, Behavioral Economics, Classical Economics
PDF Full Text Request
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