It is now 30 years since the revolution which began in growth theory and then swept through microeconomics. The new microeconomics is standard in all graduate programs, half of a two-course sequence. Adoption of the new mac- roeconomics has been slower, but the revolution is coming her as well. If there is any subject in economics which should be behavioral, it is macroeconomics. I have argued in this lecture that reciprocity, fairness, identity, money illu- sion, loss aversion, herding, and procrastination help explain the significant departures of real- world economies from the competitive, general- equilibrium model.
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