American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 44 3 September 2006 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=44&issue=3&issue_date=September 2006 Journal Article Book Reviews 722 747 http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=44&issue=3&article=6&issue_date=September 2006 10.1257/jel.44.3.722 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 44 3 September 2006 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=44&issue=3&issue_date=September 2006 Journal Article Annotated Listing of New Books 748 848 http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=44&issue=3&article=7&issue_date=September 2006 10.1257/jel.44.3.748 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 44 3 September 2006 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=44&issue=3&issue_date=September 2006 Journal Article JEL Classification System 849 861 http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=44&issue=3&article=8&issue_date=September 2006 10.1257/jel.44.3.849 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 44 3 September 2006 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=44&issue=3&issue_date=September 2006 Journal Article Behavioral Economics Comes of Age: A Review Essay on Advances in Behavioral Economics WolfgangPesendorfer 712 721 Advances in Behavioral Economics contains influential second-generation contributions to behavioral economics. Building on the seminal work by Kahnemann, Strotz, Thaler, Tversky, and others, these contributions have established behavioral economics as an important field of study in economics. In this essay, I discuss aspects of the research strategy and methodology of behavioral economics, as exemplified by the contributions to Advances. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=44&issue=3&article=5&issue_date=September 2006 10.1257/jel.44.3.712 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 44 3 September 2006 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=44&issue=3&issue_date=September 2006 Journal Article Advancing Beyond Advances in Behavioral Economics DrewFudenberg 694 711 This essay discusses the field of behavioral economics, with a focus on the papers in Advances in Behavioral Economics. These papers show that there is a body of “behavioral facts” that is both economically significant and regular enough to be modeled. For the field to advance further, it should devote more attention to the foundations of its models, and develop unified explanations for a wider range of phenomena. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=44&issue=3&article=4&issue_date=September 2006 10.1257/jel.44.3.694 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 44 3 September 2006 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=44&issue=3&issue_date=September 2006 Journal Article Reviews of the 2006 Economic Report of the President AlanAuerbach RebeccaBlank MartinFeldstein MichaelKatz KennethRogoff 662 693 The Journal of Economic Literature regularly reviews books of interest to the economics profession. The 2006 Economic Report of the President (ERP) falls under that purview. In the reviews that follow, Martin Feldstein reviews the overview chapter of the as well as topics relating to macroeconomics. Alan Auerbach reviews the ERP’s discussion of tax-related issues, while Ken Rogoff reviews the ERP’s discussion of international economic topics. Rebecca Blank writes on labor market issues in the ERP, and Michael Katz reviews the ERP’s discussion of health care issues. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=44&issue=3&article=3&issue_date=September 2006 10.1257/jel.44.3.662 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 44 3 September 2006 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=44&issue=3&issue_date=September 2006 Journal Article Extending the Bounds of Rationality: Evidence and Theories of Preferential Choice JörgRieskamp Jerome R.Busemeyer Barbara A.Mellers 631 661 Most economists define rationality in terms of consistency principles. These principles place “bounds” on rationality—bounds that range from perfect consistency to weak stochastic transitivity. Several decades of research on preferential choice has demonstrated how and when people violate these bounds. Many of these violations are interconnected and reflect systematic behavioral principles. We discuss the robustness of the violations and review the theories that are able to predict them. We further discuss the adaptive functions of the violations. From this perspective, choices do more than reveal preferences; they also reflect subtle, yet often quite reasonable, dependencies on the environment. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=44&issue=3&article=2&issue_date=September 2006 10.1257/jel.44.3.631 American Economic Association Nashville, TN 0022-8282 Journal of Economic Literature http://www.aeaweb.org/journal.html 44 3 September 2006 http://www.aeaweb.org/articles/issue_detail.php?journal=JEL&volume=44&issue=3&issue_date=September 2006 Journal Article Trade, FDI, and the Organization of Firms ElhananHelpman 589 630 New developments in the world economy have triggered research designed to better understand the changes in trade and investment patterns, and the reorganization of production across national borders. Although traditional trade theory has much to offer in explaining parts of this puzzle, other parts required new approaches. Particularly acute has been the need to model alternative forms of involvement of business firms in foreign activities because organizational change has been central in the transformation of the world economy. This paper reviews the literature that has emerged from these efforts. The theoretical refinements have focused on the individual firm, studying its choices in response to its own characteristics, the nature of the industry in which it operates, and the opportunities afforded by foreign trade and investment. Important among these choices are organizational features, such as sourcing strategies. But the theory has gone beyond the individual firm, studying the implications of firm behavior for the structure of industries. It provides new explanations for trade structure and patterns of foreign direct investment, both within and across industries, and has identified new sources of comparative advantage. http://www.aeaweb.org/articles/article_detail.php?journal=JEL&volume=44&issue=3&article=1&issue_date=September 2006 10.1257/jel.44.3.589