Economic behavior starts in childhood. Children live in complex economic environments. They make choices about what to consume and they earn money. Children save, exchange goods, make decisions under uncertainty, and they share and bargain among themselves and with their parents and other adults. While this behavior is interesting enough for its own sake, what makes it important is the simple fact that children grow up to be adults. In every science one of the first steps towards understanding something is understanding its development, and we believe economics is no different. This research is motivated by the belief that many of the economic behaviors seen in adults are rooted in preferences, norms, and habits acquired in childhood. We have three general goals. The first is to study the development of rational economic behavior. We investigate the age at which age children begin to behave in a way that is consistent with standard economic models. In addition, since there are many examples of behavior where adults do not act rationally, we examine whether these anomalies are also present in children, in an attempt to help explain why they are present in adults. Our second objective is to study the development of preferences with age. We investigate what sorts of preferences change with time, and what sorts become fixed at young ages. Our third objective concerns the development of bargaining behavior. We study what sorts of bargaining strategies children learn first, when they learn these strategies, and under what circumstances they use them.
