Behavioral Economics, History of

This article reviews the historical development of behavioral economics, with an emphasis on how it has become part of mainstream economics. First I describe the separation between economics and psychology as a historical background against which behavioral economics emerged. Then I introduce critiques of expected utility theory (EUT), and explain how behavioral decision research developed using EUT as an experimental paradigm. I then distinguish ‘old, ’ ‘new, ’ and ‘second-wave ’ behavioral economics, and briefly discuss criticisms of the last