The behavioral economics of George Akerloff and Harvey Leibenstein
Abstract
Behavioral economics is now receiving greater acceptance in the economics profession. One illustration of this acceptance is the Nobel Prize awarded to George Akerloff in 2001.Akerloff’s work included issues of rationality, work norms, and asymmetric information in both more and less developed countries. Leibenstein was one of the first economists in recent decades to explore behavioral economics. This was accomplished through his development of X-efficiency theory, but not exclusively through X-efficiency theory. This paper will show similarities in the work done by Akerloff and Leibenstein, and cite examples of how Akerloff extended some of Leibenstein’s work, leading to Akerloff’s much deserved Nobel Prize.