Abstract
This paper reviews the newly emerging field of Behavioral Industrial Organization, i.e., applications of Behavioral Economics to Industrial Organization settings. We present a few select recent models developed in the Behavioral Economics paradigm and then explore the implications of these models for a monopoly pricing problem. These models generalize consumer preferences and judgments to allow for: (1) preference for instant gratification (quasihyperbolic discounting); (2) overconfidence and biased beliefs; and (3) sensitivity to reference points and loss aversion. The main goal of this selected review is to demonstrate the potential of behavioral approaches in Industrial Organization.