Misbehaving
Richard H. Thaler
Misbehaving
Richard H. Thaler
The Making of Behavioral Economics
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- 9 key ideas
- Text
- Published 2015
Introduction
Richard Thaler spent his career showing that real people do not decide the way economic theory says they should, and this book tells how that argument grew into behavioral economics. It is part memoir and part history. It follows Thaler from a list of odd behavior that he kept as a young economist, through his work with Daniel Kahneman and Amos Tversky and his arguments with colleagues who defended the standard model, to his later work in finance and public policy.
The book has eight parts and 33 chapters, plus a conclusion, and each part covers a theme and a span of years. The ideas below follow the parts, with a few early objections from Part I discussed alongside the debate of Part V: Econs and Humans, ownership and loss, mental accounting, self-control, fairness, the debate with the profession, finance, tests on football and game shows, and policy work such as savings plans and the British Behavioural Insights Team.
- 1Economic theory describes Econs, but real decisions are made by Humans
- 2Owning something changes what it is worth to us, because losses weigh more than gains
- 3Mental accounting: we keep separate books in our heads, and they change how we spend and gamble
- 4We have a Planner and a Doer, which is why people sometimes want fewer choices
- 5Fairness matters to people, and it limits what firms and trading partners can do
- 6Economists met the anomalies with arguments about acting as if, stakes and learning
- 7Finance was meant to be the safest ground for the rational model, and Thaler tested it there
- 8At Chicago, Thaler tested the ideas on football drafts and game shows, where the stakes are large
- 9Helping out: Save More Tomorrow, the British nudge team, and what Thaler hopes comes next
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