Misbehaving - The making of behavioral economics

by Richard H. Thaler

Misbehaving

People are not rational

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If you’re currently studying economics, thinking about studying economics, got a degree in economics or ever took a course on economics, please do me a favor and read this book.

 

I hold a Master’s degree in economics. During my studies, often times I disagreed with the economic theories we were thought, but I found it hard to explain why. This book helped me find the root cause of my disagreement.

 

Most economic theories assume that all people are fully rational and have access to all relevant information at all times - those people are homo economicus, and they hardly resemble real people at all. In this world, everybody always makes the best choices based on their given situation.

 

Behavioral economics does not make this assumption. People are people, with their flaws and irrationalities and without access to all relevant information. These people make decisions based on their own reasoning, their gut feeling, their habits, recommendations from friends - in short, they decide things the same way you or I do.

Mr Thaler does a great job of making economics fun again. I would highly recommend this book to anyone even remotely interested in economics - you won’t regret the read.