To understand the relationship between experimental and behavioral economics, we need to go back to the late 1970s and early 1980s. In the 1970s, psychologists began conducting new kinds of experiments, the results of which seemed to falsify the assumption of rational individual behavior. This compelled experimental economists to stake out a position for the economics discipline regarding the results. Much to their surprise, their experiments corroborated the results of the psychologists. This led them to completely discard preference theory but at the same time to emphasize the role of the market as the mechanism that rationalizes individual behavior. An initially diverse and unorganized group of financial and other economists drew very different conclusions from these same experimental results. They saw them as proof of observed anomalies in financial markets and hailed Daniel Kahneman and Amos Tversky's prospect theory as the most important candidate for replacing the traditional microeconomic model of human behavior.
Skip Nav Destination
Research Article| November 01 2011
What to Conclude from Psychological Experiments: The Contrasting Cases of Experimental and Behavioral Economics
History of Political Economy (2011) 43 (4): 649–681.
Floris Heukelom; What to Conclude from Psychological Experiments: The Contrasting Cases of Experimental and Behavioral Economics. History of Political Economy 1 November 2011; 43 (4): 649–681. doi: https://doi.org/10.1215/00182702-1430274
Download citation file:
Don't already have an account? Register
You could not be signed in. Please check your email address / username and password and try again.
Could not validate captcha. Please try again.
Sign in via your InstitutionSign In