Animal Spirits

Animal spirits is a term that broadly describes individual economic behavior,influenced by psychology forces such as feelings and dispositions and produces different outcomes than rational expectations as defined by traditional economics,where emotions play no substantive role in decision making.

Tis idea constitutes an important foundation of behavioral macroeconomics.There has been a growing integration of animal spirits in contemporary research,especially after the Global Financial Crisis and the great Recession.Animal spirits are mainly used to explain phenomena such as economic fluctuations,financial and housing crises,and persistent unemployment.There have been some cases in which animal spirits function as a separate fundamental feature in economic modeling and have the same methodological status as preferences,endowments and technology.

 

"Animal Spirits" has been published in Real World Decision Making: An Encyclopedia of Behavioral Economics, (ed.) Altman, M., Santa Barbara, CA: ABC-CLIO.

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