Misbehaving by Richard H. Thaler

Nobel laureate Richard H. Thaler has spent his career studying the radical notion that the central agents in the economy are humans―predictable, error-prone individuals. *Misbehaving* is his arresting, frequently hilarious account of the struggle to bring an academic discipline back down to earth―and change the way we think about economics, ourselves, and our world.

Traditional economics assumes rational actors. Early in his research, Thaler realized these Spock-like automatons were nothing like real people. Whether buying a clock radio, selling basketball tickets, or applying for a mortgage, we all succumb to biases and make decisions that deviate from the standards of rationality assumed by economists. In other words, we misbehave. More importantly, our misbehavior has serious consequences. Dismissed at first by economists as an amusing sideshow, the study of human miscalculations and their effects on markets now drives efforts to make better decisions in our lives, our businesses, and our governments.

Coupling recent discoveries in human psychology with a practical understanding of incentives and market behavior, Thaler enlightens readers about how to make smarter decisions in an increasingly mystifying world. He reveals how behavioral economic analysis opens up new ways to look at everything from household finance to assigning faculty offices in a new building, to TV game shows, the NFL draft, and businesses like Uber.

Laced with antic stories of Thaler’s spirited battles with the bastions of traditional economic thinking, *Misbehaving* is a singular look into profound human foibles. When economics meets psychology, the implications for individuals, managers, and policy makers are both profound and entertaining.

Good prelude on how the field have been initiated and some fun back stories for books that I've read (mainly Nudge and Thinking Fast and Slow)

Richard H. Thaler is a professor of behavioral science and economics at the University of Chicago. He also co-wrote the bestseller Nudge.Economics is the most influential of the social sciences. It has far-reaching theories which impact on people's lives. Yet, economics is full of unrealistic expectations about humans behave. It assumes that everyone behaves rationally and that markets send reliable signals. It is assumed that people make the best possible choices all the time. But, says Thaler, real human beings act in predictably irrational ways; people “misbehave.” They routinely use heuristics which lead to errors in judgment. And they incorporate biases that prevent rational decision making. He illustrates his argument with anecdotes and stories of his own battles with economics orthodoxy. It becomes clear that behavioural science could “nudge” people to make better choices. For example:+ People value what they own more than what they could acquire. Investors dislike losses about twice as much as they like gains. Most people can't ignore sunk costs, though that's the most rational response.+ Investors who check their portfolios more frequently tend to invest more cautiously.An interesting read, but I recommend a much better book on the same topic: [b:Inside the Nudge Unit: How Small Changes Can Make a Big Difference 26171720 Inside the Nudge Unit How Small Changes Can Make a Big Difference David Halpern https://images.gr-assets.com/books/1441303724s/26171720.jpg 46134517].