Critical Analysis of Behavioural Economic Theories

Abstract

This research work examines the economic implications of human psychology based on a large-scale questionnaire based survey effort on diverse aspects of economic decision making amongst 313 college students in India. While the findings illustrate consistency in most of the popular theories of behavioural economics (e.g., Prospect Theory, Labour Model, Cognitive biases) it also finds certain inconsistency in the others like Apophenia, Time discount and present bias - the key theories in Behavioural Economics today. This study further tries to explain the results and the scope of further evolution in the theories. The focus is on experimental findings rather than psychological theory, surprising conclusion rather than intuitions, and descriptive prose rather than mathematics.