Description
The development of artificial intelligence and machine learning is leading to a revolution in the way we think about economic decisions. The Economics of Language explores how the use of generative AI and large language models (LLMs) can transform the way we think about economic behaviour. It introduces the LENS framework (Linguistic content triggers Emotions and suggests Norms, which shape Strategy choice) and presents empirical evidence that LLMs can predict human behaviour in economic games more accurately than traditional outcome-based models. It draws on years of research to provide a step-by-step development of the theory, combining accessible examples with formal modelling. Offering a roadmap for future research at the intersection of economics, psychology, and AI, this book equips readers with tools to quantify the role of language in decision-making and redefines how we think about utility, rationality, and human choice.
Table of Contents
Introduction; 1. The birth of behavioural economics; 2. Economic consequentialism; 3. A paradigm crisis; 4. The role of Large Language Models: first part; 5. The LENS model; 6. Sentiment analysis; 7. Normative analysis; 8. The role of large language models: Part II: 9. Broader implications and future directions; Conclusion.
