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Behavioral Organizational Economics

By Colin F. Camerer and Ulrike Malmendier


conference on economic institutions and behavioral economics. This is a very rough working draft for the conference. The Mark Twain apology applies, we wish we had more time to write less. Comments are genuinely appreciated, especially on what to cut, and on important omissions (self-serving ones are expected). Ideas from the NBER Organizational Economics conference in March, 2004, particularly Bob Gibbons’s presentation, was useful, as were discussions with Chip Heath and Sendhil Mullainathan. 0 This essay is about how behavioral economics can be applied to organizations, and can also be enriched by thinking about how individuals behave in organizations. Behavioral economics modifies economic theory to account for normal limits on rational calculation, willpower and greed, and the natural psychophysical properties of preference and judgment (e.g. Mullainathan and Thaler, 2001; Camerer and Loewenstein, 2004). Thinking about organizations naturally extends this definition to include how socialization and identity shape individual behavior. (While little about these extensions will be discussed in this paper, see Akerlof and Kranton, 2003). From a methodological perspective, behavioral economics is simply a humbl

Publisher: Princeton University Press
Year: 2007
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