@article{529400abbc324ee28a00055d0d4c7c69,
title = "Behavioral economics and benefit cost analysis",
abstract = "This paper provides a brief review of the theory of benefit cost analysis and then discusses proposals by economists calling for developing a new foundation for applied welfare economics. These proposals assume individual choices cannot be reconciled with coherent preferences. As a result, applied welfare economics must consider a different basis for defining the public tradeoffs to be used in project evaluation. This analysis concludes none of the available proposals meets the needs for policy evaluation with benefit cost analysis. The paper also offers a different explanation for the seemingly incoherent preferences implied by some choices. The last part of the paper reports the results of laboratory experiments intended to evaluate whether market outcomes would allow analysts to discriminate among alternative hypothesis for seemingly irrational choices.",
keywords = "Behavioral economics, Benefit cost analysis",
author = "Smith, {V. Kerry} and Moore, {Eric M.}",
note = "Funding Information: Acknowledgements Partial support for this research came from Resources for the Future and the United States Department of Homeland Security through the Center for Risk and Economic Analysis of Terrorism Events (CREATE) under grant numbers 2007-ST-061-000001 and DE-AC05-76RL01830. Thanks are due Marco Janssen, John List, and Charles Plott for early suggestions on the experimental economics literature related to non-traditional incentives, to Allen Klaiber for comments and help with the experiments to Edward Schlee for comments on the experiments, to Garth Baughman, Jonathan Eyer, Matthew Gleason, and Shaun Sparker for assistance implementing the experiments, and to Jon Valentine for assistance in preparing this manuscript. Thanks are also due Gardner Brown and participants in the Conference on Behavioral Economics at Western Washington University in June 2009 for constructive comments on an earlier version of this paper. However, any opinions, findings, and conclusions or recommendations in this document are those of the authors.",
year = "2010",
month = jun,
doi = "10.1007/s10640-010-9358-5",
language = "English (US)",
volume = "46",
pages = "217--234",
journal = "Environmental and Resource Economics",
issn = "0924-6460",
publisher = "Springer Netherlands",
number = "2",
}