The Economist’s Free Exchange column discusses some research on behavioral economics, e.g. trying to actually study and model the way people really behave and not some mathematically perfect “rational” individual. The column emphasizes this working paper by Dan McFadden, an Econometrician at UC Berkeley who won the 2000 Nobel Prize with James Heckman (there’s a lot of accessible information about their research, speeches for the Nobel Prize, etc. at this link). If the stuff in the Free Exchange column sounds cool, check out the paper — parts of it are mathematically challenging but you should be able to get a handle on other parts. For what it’s worth, I think the columns too negative on how most economists think about this stuff: there’s broad recognition that it would be great to have more realistic models of people’s behavior, but it’s hard to do it well enough that you can use those models to make better policy recommendations, forecasts, etc., than you get from the unrealistic models. Once you can use those behavioral models to do basic economic tasks well you’ll see economists use them a lot more.
The Economist has an editorial (sorry, leader) and article on Cyprus. Brutal opening: “Cyprus, it is said, never misses an opportunity to miss an opportunity. After its euro bail-out, that needs to change, not least for the sake of its battered economy. Cypriots face the grim reality that, thanks mainly to the collapse of much of their financial-services industry, GDP will shrink by 15% this year, another 15% in 2014, and perhaps 5% more in 2015…. That is a comparable drop to 1974-75, after a Greek-backed coup followed by a Turkish invasion led to the island’s partition into a Greek-Cypriot-controlled south and a Turkish-Cypriot-controlled north.”