Behavioral Economics: How Psychology Made Its (Limited) Way Back Into Economics

Behavioral economics and its focus on the interrelations between eco nomics and psychology is attracting increasing attention and recogni tion. In 1998, the Journal of Economic Literature published an article offering an overview of the connections between economics and psy chology (Rabin 1998). In defense of his focus on the relevance of psy chological findings for economics, the author noted: "Because psychol ogy systematically explores human judgment, behavior, and well-being, it can teach us important facts about how humans differ from the way they are traditionally described by economists" (11).