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  5. Behavioral Incentive Compatibility and Empirically Informed Welfare Analysis: An Introductory Guide

Journal of Economic Perspectives

ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)

Behavioral Incentive Compatibility and Empirically Informed Welfare Analysis: An Introductory Guide

  • Alex Rees-Jones
Journal of Economic Perspectives
vol. 38, no. 4, Fall 2024
(pp. 155–74)
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Abstract

A growing body of research conducts welfare analysis that assumes behavioral incentive compatibility—that is, that behavior is governed by pursuit of incentives conditional on modeled imperfections in decision-making. In this article, I present several successful examples of studies that apply this approach and I use them to illustrate guidance for pursuing this type of analysis.

Citation

Rees-Jones, Alex. 2024. "Behavioral Incentive Compatibility and Empirically Informed Welfare Analysis: An Introductory Guide." Journal of Economic Perspectives, 38 (4): 155–74. DOI: 10.1257/jep.38.4.155

Additional Materials

JEL Classification

  • D47 Market Design
  • D60 Welfare Economics: General
  • D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
  • G22 Insurance; Insurance Companies; Actuarial Studies
  • H25 Business Taxes and Subsidies including sales and value-added (VAT)
  • I13 Health Insurance, Public and Private
  • I28 Education: Government Policy
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