BEHAVIORAL ECONOMICS

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Abstract
Economics, like behavioral psychology, is a science of behavior, albeit highly organized human behavior. The value of economic concepts for behavioral psychology rests on (1) their empirical validity when tested in the laboratory with individual subjects and (2) their uniqueness when compared to established behavioral concepts. Several fundamental concepts are introduced and illustrated by reference to experimental data: open and closed economies, elastic and inelastic demand, and substitution versus complementarity. Changes in absolute response rate are analyzed in relation to elasticity and intensity of demand. The economic concepts of substitution and complementarity are related to traditional behavioral studies of choice and to the matching relation. The economic approach has many implications for the future of behavioral research and theory. In general, economic concepts are grounded on a dynamic view of reinforcement. The closed‐economy methodology extends the generality of behavioral principles to situations in which response rate and obtained rate of reinforcement are interdependent. Analysis of results in terms of elasticity and intensity of demand promises to provide a more direct method for characterizing the effects of “motivational” variables. Future studies of choice should arrange heterogeneous reinforcers with varying elasticities, use closed economies, and modulate scarcity or income. The economic analysis can be extended to the study of performances that involve subtle discriminations or skilled movements that vary in accuracy or quality as opposed to rate or quantity, and thus permit examination of time/accuracy trade‐offs.