1 Mechanism in behavioural economics Michael Joffe Imperial College London Department of Epidemiology & Biostatistics St Mary’s Campus Norfolk Place London W2 1PG m.joffe@imperial.ac.uk +44 20 7609 1470 Orcid: 0000-0001-6907-6183 Abstract Behavioural economics promises to bring economics closer to being evidence based. However, its ability to do this depends on aligning its account of mechanism with that operating in the real world. This in turn may depend on a methodological issue: whether the findings of behavioural economics are used to modify or extend standard theory, or to contribute towards replacing it where required – respectively the incremental and selective replacement strategies. I focus on the incremental approach, in terms of its implied causal mechanism. Two stages are involved, corresponding to the prediction of standard theory and to a separate component that aligns it with actual observations. In behavioural economics, one possible interpretation of the language of ‘biases’ is such a two-stage approach. More explicitly, Rabin advocates it in the form of PEEMs (Portable Extensions of Existing Models). A more direct, one-stage approach may have some advantages, at least for some research topics. Key words Behavioural economics Biases Economic methodology Causal mechanism Evidence-based economics PEEMs (Portable Extensions of Existing Models) Jel classification B41; D91: G41