Behavioral Economics

The Institute for New Economic Thinking takes a broad view of economic research and supports it in many ways: through its main grant program, through working groups it organizes, and via conferences, panels, and other smaller gatherings of scholars across the globe.

Institute scholars normally publish their work in journals and books. While many – but far from all – of this work appears in working papers sponsored by the Institute and other leading research forums, the Institute also attempts to make its research results accessible to a wider public on its website. Below is a sampling of interviews featuring Institute scholars explaining the significance of their research in non-technical terms.

Overview of Chinese Local Government Debt

In the movie Sanctum, a team of divers tried to explore the largest underwater cave in the world, where no human beings had been before, and almost all of them, including the master diver, lost their lives. Only one young diver went through all the tunnels, inner lakes, and deadly terrain, found the exit to the sea, and survived.

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Scott Condie - Modeling Asset Markets when Knowledge is Ambiguous

About the Interview

When you flip a coin, you expect heads and tails to show up with a 50% chance each. But what if all you knew was that heads and tails each have a chance of at least 25%? That's how Scott Condie captures Knightian uncertainty in asset markets. He models investors who act on basis of ambiguous knowledge, with the result that asset prices fail to reflect all private information. This is financial market modeling beyond the efficient market hypothesis - this is new economic thinking. Read more


David Tuckett - How Investors Use Stories to Tame Uncertainty

About the Interview

If you want to understand how fund managers choose a portfolio, why not ask them? That’s what David Tuckett does: he draws on standard sociological techniques of interviewing to understand investors’ decisions to buy or sell assets. He says financial markets cannot be driven by economic fundamentals – because the future is uncertain – instead, they are driven by stories about fundamentals. David Tuckett merges insights from Keynes, from sociology, and from psychoanalysis to develop what he calls emotional finance – this is new economic thinking. Read more


Economic Thinking and Buddhist Thinking

Project Leader: 

My goal is to understand Buddhist thinking in rational choice terms, and apply that to some important contemporary economic problems. In both Buddhism and economics the central question is human happiness or the relief of human suffering. But the answers in Buddhism and economics are opposite. In Buddhism, desires are like addictions. Read more

An International Network on Expectational Coordination

Project Leader: 

The view of the future held by participating agents is a key determinant of economic activity. Correspondingly, the understanding of expectational coordination is a central question of economic theory. Read more

Advancing Imperfect Knowledge Economics

Project Leader: 

Instability is an inherent feature of financial markets, and more broadly of capitalist economies. Long before the financial crisis that began in 2007, leading economists acknowledged that contemporary models are of little help in understanding this instability. Read more

Ha-Joon Chang: Economics Upside Down

The Conventional Wisdom of Free Market, Free Trade Economics is Often Wrong and Sometimes Needs to be Flipped on its Head

Free trade does NOT make countries richer. There is no such thing as a free market. Companies should NOT be run in the interests of their owners. These are some of the controversial statements from Ha-Joon Chang, a Reader in Political Economy of Development at the University of Cambridge, and author of the new book: “23 Things They Don’t Tell You About Capitalism.” Read more

Full Interview: Obliquity and the Indirect Way to Success - John Kay

How "Obliquity" -- Pursuing Goals in a Roundabout Way -- is Better for Business and for an Innovative Economy Read more

The Big Lessons for Business - John Kay

In part 5 of INET's interview with John Kay, he discusses the idea of how the story of the British Post War pharmaceutical industry shows that most profitable companies are not the most profit-oriented