Why do smart people make irrational decisions every day? Why do we repeatedly make the same mistakes when we make our selections? How do our expectations influence our actual opinions and decisions? The answers, as revealed by behavioural economist Professor Dan Ariely of MIT, will surprise you.
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Standard economic analyses rely on an unrealistic model of human behavior in which economic agents are hyperrational robots. Modern behavioral economics takes a more realistic approach and assumes that economics agents are humans, who sometimes forget where they put their keys, panic in the face of economic volatility, and are growing more obese by the day. The theme of Nudge is that it is possible to help such humans make better choices without taking away their freedoms, just by giving them a gentle nudge. The financial crisis of 2008 makes the message of Nudge more relevant than ever, both in determining how we got into this mess, how we can get out, and how we can prevent another crisis.
Stephen J. Dubner | SuperFreakonomics: Global Cooling, Patriotic Prostitutes, and Why Suicide Bombers Should Buy Life Insurance
Freakonomics by Steven D. Levitt and Stephen J. Dubner spent more than two years on the New York Times Best Sellers list and sold more than 4 million copies worldwide. The book offered surprising insights into hot-button issues like cheating, crime, parenting, and class consciousness, in a compelling and readable style. Now, with SuperFreakonomics, the "rogue economist” and the award-winning journalist delve into the hidden agendas of all kinds of individuals, and the incentives that drive them. Featuring: Stephen J. Dubner is an author and journalist, formerly a writer and editor for The New York Times Magazine. The author’s Freakonomics blog on the New York Times website receives more than 1 million unique hits each month.
Acclaimed economist Robert Shiller challenges the economic wisdom that got us into the current financial mess, and puts forward a bold new vision to transform economics and restore prosperity. The global financial crisis has made it clear that powerful psychological forces are imperilling the wealth of nations today. From blind faith in ever-rising housing prices to plummeting confidence in capital markets, ‘animal spirits’ are driving financial events worldwide.
Shiller reasserts the necessity of an active government role in economic policymaking by recovering the idea of ‘animal spirits’, a term John Maynard Keynes used to describe the gloom and despondence that led to the Great Depression and the changing psychology that accompanied recovery. Managing these animal spirits argues Shiller, requires the steady hand of government - simply allowing markets to work won’t do it.
In rebuilding the case for a more robust, behaviourally informed Keynesianism, Shiller looks at the most pervasive effects of animal spirits in today’s economic life - confidence, fear, bad faith, corruption, and a concern for fairness - showing how Reaganomics, Thatcherism, and the rational expectations revolution failed to account for them.