Shackle and Behavioural Economics

Abstract

Most economists who are familiar with the works of George Shackle probably view him primarily as someone who combined elements from, and contributed to, Austrian and Post Keynesian approaches to economics. In this chapter, however, we cast him in a different role, that of a pioneer in behavioural economics. As is evident from Earl (ed.) (1988), Sent (2004) and Tomer (2007), behavioural economics takes many forms but may be generally thought of as using knowledge of how people actually make decisions, and of actual business practices, as foundations for economic analysis and policy. Economists sometimes gather the knowledge that provides the foundations for behavioural economics themselves, via questionnaires, in-depth case studies and experiments. Some, including Shackle, also engage in intense introspection on the nature of the human condition and how people deal with the challenges of everyday life. But many of the underpinnings of behavioural economics have come from social and cognitive sciences, particular from various branches of psychology. Indeed, though the frequently renamed prize that is popularly known as the Nobel Prize in Economics has been awarded twice for contributions to behavioural economics, in neither case did the recipient hold an academic affiliation as an economist: the 1978 recipient, Herbert Simon, a remarkable polymath, was a professor of computing science and psychology, while Daniel Kahneman, who shared the 2002 Prize with experimental economist Vernon Smith, is a professor of psychology.KeywordsProspect TheoryLoss AversionAspiration LevelIndifference CurveLottery TicketThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.