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Behavioural Economics

Within focal area Behavioural Economics, focus is on fostering research that increases our understanding of how behavioural factors impact decisions of economic agents. These include consumers, firms and financial market participants.

  • Background of Behavioural Economics

    The behavioural approach to economics emerged in the 1960s, partly as a response to neoclassical theory with its paradigm of rational behaviour and rational expectations. Stimulated by laboratory experiments in which individual behaviour can be carefully monitored in a controlled environment, economists started taking insights from other social sciences (such as psychology and sociology) seriously.

    At the same time, evolutionary foundations for economic behaviour were sought in collaboration with biologists. This new interdisciplinary approach was quickly labeled 'Behavioural Economics'.

  • Research

    Theoretical and empirical research

    Since its emergence the area of Behavioural Economics has continuously grown in importance. All major academic journals in economics now regularly publish papers in this field. Examples of the questions asked by researchers in this area are:

    • In what circumstances are people more likely to compete and when do they prefer to cooperate?
    • What is the role of trust and trustworthiness in economic interactions?
    • How do strategies in financial markets evolve and what strategies are most likely to be successful?
    • To what extent is economic behaviour hard-wired and a consequence of evolutionary selection?

    Our contributions

    We contribute to a conducive research environment for doing behavioural economic research. The unifying factor in our research is the extensive use of the experimental method. With this method, our researchers have made contributions to a wide variety of topics in economics. Highlights include:

    • New behavioural insights on how competition can be encouraged in thin uncompetitive markets and the study of the possibility to use auctions for charity purposes.
    • A central focus on the role of indirect reciprocity in the evolution of human cooperation;
    • New evidence on biological gender differences in competition.

    A new behavioural theory of heterogeneous expectations for macro and financial markets has been developed and fitted to individual micro as well as aggregate macro experimental data.

  • Public outreach

    Cooperations across the world

    Within the area of Behavioural Economics we collaborate with top-level research groups with a similar agenda across the world. Examples are the University of Nottingham, the Catholic University of Milan, and New York University. These collaborations have led to joint authorships and an active exchange of PhD Students.

    We also collaborate with societal organisations, like the Dutch Central Bank (DNB) and the Dutch government,. We intend to continue such joint research efforts to spread our findings on how important understanding behaviour is for the development of mechanisms. This knowledge helps the design of auctions, markets, or bonus-arrangements for firm managements, for example.

    Core groups joined forces

    We have an excellent status in the field of Behavioural Economics. We merged 4 core groups: CREED, CeNDEF, the Industrial Organisation group and the Human Capital group.