Reading Thaler's book makes me feel sorry for all those children out there who were raised by economists. Can you imagine? Constantly being bribed with cookies and then being told that if you waited some indefinite time period for your cookie that you could then have an additional cookie? Then they put the cookie on the plate and leave the room so the poor kid can sweat it out. Obviously, a child with self control will pass this scenario with flying colors. He's clearly the next Odysseus. If he eats the cookie, on the other hand, not only does he just get one cookie but he also has to suffer through a lecture on opportunity cost.
There really should be a foundation for these people.
Human beings really are amazing creatures. The can create works of art and musical scores. They can build monuments that reach the clouds. They are also incredibly bad at making predictions and decisions about the future. They are prone to having their higher functions hijacked by the same emotions that drive animals to fight, hide, hoard, or procreate. And they are anything but rational all the time.
Making the rational, informed consumer the basis of economic theories and principles is, well, irrational. Thaler's work in incorporating a little psychology into economics is a worthwhile endeavor. He does a pretty good job of weaving a number of economic concepts into the discussion without making it mind-numbingly dull. He likewise aptly illustrates the ability of smart people to get so entrenched behind their brains that the forget to use their eyes. I'm not sure I phrased that correctly but, at the same time, I'm sure you know exactly what I mean. Misbehaving taught me an incredible amount about things like sunk costs, perceptions of fairness, and the endowment effect among numerous other topics. I won't pretend to understand Prospect Theory (because I don't) but I can see numerous applications beyond game show decision making.
In short this book is as entertaining as it is informative. I especially liked the section on the office lottery for professors moving to a new building.
Now back to that poor econ kid and his siblings. His parents are probably running a prisoner's dilemma on them to figure out who stole the cookie from the cookie jar. Wouldn't you like to help a poor economist's kid today? We've already debited your account unless you opted out.
There really should be a foundation for these people.
Human beings really are amazing creatures. The can create works of art and musical scores. They can build monuments that reach the clouds. They are also incredibly bad at making predictions and decisions about the future. They are prone to having their higher functions hijacked by the same emotions that drive animals to fight, hide, hoard, or procreate. And they are anything but rational all the time.
Making the rational, informed consumer the basis of economic theories and principles is, well, irrational. Thaler's work in incorporating a little psychology into economics is a worthwhile endeavor. He does a pretty good job of weaving a number of economic concepts into the discussion without making it mind-numbingly dull. He likewise aptly illustrates the ability of smart people to get so entrenched behind their brains that the forget to use their eyes. I'm not sure I phrased that correctly but, at the same time, I'm sure you know exactly what I mean. Misbehaving taught me an incredible amount about things like sunk costs, perceptions of fairness, and the endowment effect among numerous other topics. I won't pretend to understand Prospect Theory (because I don't) but I can see numerous applications beyond game show decision making.
In short this book is as entertaining as it is informative. I especially liked the section on the office lottery for professors moving to a new building.
Now back to that poor econ kid and his siblings. His parents are probably running a prisoner's dilemma on them to figure out who stole the cookie from the cookie jar. Wouldn't you like to help a poor economist's kid today? We've already debited your account unless you opted out.