Adrian Solek

Cracow University of Economics

Poland

adrian.solek@uek.krakow.pl

Behavioral economics approaches to public policy 

Received: June, 2014

1st Revision: September, 2014

Accepted: October, 2014

ABSTRACT. The relatively new school of thought – behavioral economics is complementary to the neoclassical model of decision making, as it accounts for psychological factors underlying people’s choices, which are omitted by standard models. Several cognitive tendencies have been identified. These findings may be used by policy makers as tools of furthering desirable behavior of individuals. Such regulation may take the form of either soft or more heavy-handed paternalism. However its implementation raises some criticisms, ranging from practical issues to more fundamental questions of respecting freedom of choice. The presented paper compares the ways in which decisions and choices are addressed in neoclassical and behavioral economics and implications of their assumptions and findings for policy measures that may be taken by the government. Controversies elicited by paternalistic approaches have also been elaborated.

DOI: 10.14254/2071-8330.2014/7-2/3

JEL Classification:  D03, H10, L51

Keywords: behavioral economics, behavioral biases, regulation, paternalism