Humans are inherently prone to status quo bias; we frequently take the path of least resistance. Just highlights how changing the default option can drastically alter macro outcomes.
+-----------------------------------------------------------+ | 1. Foundational Theory | | - Bounded Rationality, Heuristics, & Cognitive Biases | +-----------------------------------------------------------+ | v +-----------------------------------------------------------+ | 2. Risk, Uncertainty, & Time | | - Prospect Theory, Loss Aversion, & Present Bias | +-----------------------------------------------------------+ | v +-----------------------------------------------------------+ | 3. Social Economics & Applications | | - Game Theory, Altruism, Fairness, & Policy Design | +-----------------------------------------------------------+ Foundations of Choice
Understanding the Choice Architecture: An Introduction to Behavioral Economics by David R. Just
Setting the stage by defining standard versus behavioral models. introduction to behavioral economics david r just pdf
Decision-making when outcomes are not guaranteed.
Developed by Daniel Kahneman and Amos Tversky, Prospect Theory is a cornerstone of Just's book. It shows that people evaluate value in gains and losses relative to a baseline, rather than looking at absolute wealth. A key finding is loss aversion: the pain of losing $100 hurts roughly twice as much as the joy of winning $100. 3. Intertemporal Choice and Present Bias
This guide outlines the key sections and core concepts of Introduction to Behavioral Economics David R. Just , first published in 2013 by Humans are inherently prone to status quo bias;
Standard economics suggests people discount the future at a steady, consistent rate. Just explains that humans actually suffer from present bias. We overvalue immediate rewards and undervalue future consequences. This explains why someone might resolve to start a diet "tomorrow" but eat a donut today. 4. Fairness and Social Preferences
Humans are not purely selfish. David R. Just details how economics must account for altruism, spite, and equity. Game Theory Anomalies Player 1 divides
: An introduction to how human behavior often deviates from standard economic models. Mental Accounting Foundational Theory | | - Bounded Rationality, Heuristics,
An emerging frontier using fMRI and brain-imaging technology to observe which neural pathways fire during financial risk-taking and consumption decisions. 6. Sourcing the Textbook and PDF Safety
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Just utilizes experimental literature and news items to illustrate several critical psychological biases:
The marginal impact of gains or losses decreases as they grow larger. The difference between losing $10 and $20 feels much greater than the difference between losing $1,010 and $1,020.