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Misbehaving: The Making of Behavioral Economics Misbehaving: The Making of Behavioral Economics by Richard H. Thaler
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“Psychologists tell us that in order to learn from experience, two ingredients are necessary: frequent practice and immediate feedback.”
Richard H Thaler, Misbehaving: The Making of Behavioural Economics
“The purely economic man is indeed close to being a social moron. Economic theory has been much preoccupied with this rational fool.”
Richard H. Thaler, Misbehaving: The Making of Behavioural Economics
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
Richard H. Thaler, Misbehaving: The Making of Behavioral Economics
“What makes the bias particularly pernicious is that we all recognize this bias in others but not in ourselves.”
Richard H. Thaler, Misbehaving: The Making of Behavioral Economics
“My only advice for reading the book is stop reading when it is no longer fun.”
Richard H. Thaler, Misbehaving: The Making of Behavioral Economics
“Worldly wisdom teaches that is it is better for reputation to fail conventionally than to succeed unconventionally.”
Richard H. Thaler, Misbehaving: The Making of Behavioural Economics
“The interview started. Hearing a friend tell an old story about you is not an exciting activity, and hearing someone praise you is always awkward. I picked up something to read and my attention drifted— until I heard Danny say: “Oh, the best thing about Thaler, what really makes him special, is that he is lazy.” What? Really? I would never deny being lazy, but did Danny think that my laziness was my single best quality? I started waving my hands and shaking my head madly but Danny continued, extolling the virtues of my sloth. To this day, Danny insists it was a high compliment. My laziness, he claims, means I only work on questions that are intriguing enough to overcome this default tendency of avoiding work. Only Danny could turn my laziness into an asset.”
Richard H Thaler, Misbehaving: The Making of Behavioural Economics
“The ideal organizational environment encourages everyone to observe, collect data, and speak up.”
Richard H. Thaler, Misbehaving: The Making of Behavioral Economics
“Of course, coaches are Humans. They tend to do things the way they have always been done, because those decisions will not be second-guessed by the boss. As Keynes noted, following the conventional wisdom keeps you from getting fired.”
Richard H. Thaler, Misbehaving: The Making of Behavioural Economics
“Many people have made money selling magic potions and Ponzi schemes, but few have gotten rich selling the advice, “Don’t buy that stuff.”
Richard H. Thaler, Misbehaving: The Making of Behavioral Economics
“The core premise of economic theory is that people choose by optimizing.”
Richard H. Thaler, Misbehaving: The Making of Behavioral Economics
“Giving up the opportunity to sell something does not hurt as much as taking the money out of your wallet to pay for it. Opportunity costs are vague and abstract when compared to handing over actual cash.”
Richard H. Thaler, Misbehaving: The Making of Behavioral Economics
“discovery starts with anomalies.”
Richard H. Thaler, Misbehaving: The Making of Behavioral Economics
“For four decades, since my time as a graduate student, I have been preoccupied by these kinds of stories about the myriad ways in which people depart from the fictional creatures that populate economic models. It has never been my point to say that there is something wrong with people; we are all just human beings—homo sapiens. Rather, the problem is with the model being used by economists, a model that replaces homo sapiens with a fictional creature called homo economicus, which I like to call an Econ for short. Compared to this fictional world of Econs, Humans do a lot of misbehaving, and that means that economic models make a lot of bad predictions, predictions that can have much more serious consequences than upsetting a group of students. Virtually no economists saw the financial crisis of 2007–08 coming,* and worse, many thought that both the crash and its aftermath were things that simply could not happen.”
Richard H Thaler, Misbehaving: The Making of Behavioural Economics
“We don’t have to stop inventing abstract models that describe the behavior of imaginary Econs. We do, however, have to stop assuming that those models are accurate descriptions of behavior, and stop basing policy decisions on such flawed analyses.”
Richard H. Thaler, Misbehaving: The Making of Behavioural Economics
“You know, at some point people reach an age at which they can no longer be considered ‘promising.’ I think it is about the time they turn forty.”
Richard H. Thaler, Misbehaving: The Making of Behavioral Economics
“It is time to stop making excuses. We need an enriched approach to doing economic research, one that acknowledges the existence and relevance of Humans.”
Richard H. Thaler, Misbehaving: The Making of Behavioral Economics
“Overconfidence is a powerful force.”
Richard H. Thaler, Misbehaving: The Making of Behavioral Economics
“Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.”
Richard H. Thaler, Misbehaving: The Making of Behavioral Economics
“Because learning takes practice, we are more likely to get things right at small stakes than at large stakes. This means critics have to decide which argument they want to apply. If learning is crucial, then as the stakes go up, decision-making quality is likely to go down.”
Richard H. Thaler, Misbehaving: The Making of Behavioural Economics
“A third positive result even further from the traditional tool kit of financial incentives comes from a recent randomized control trial conducted in the U.K., using the increasingly popular and low-cost method of text reminders. This intervention involved sending texts to half the parents in some school in advance of a major math test to let them know that their child had a test coming up in five days, then in three days, then in one day. The researchers call this approach “pre-informing.” The other half of parents did not receive the texts. The pre-informing texts increased student performance on the math test by the equivalent of one additional month of schooling, and students in the bottom quartile benefited most. These children gained the equivalent of two additional months of schooling, relative to the control group. Afterward, both parents and students said they wanted to stick with the program, showing that they appreciated being nudged. This program also belies the frequent claim, unsupported by any evidence, that nudges must be secret to be effective.”
Richard H. Thaler, Misbehaving: The Making of Behavioral Economics
“Roughly speaking, losses hurt about twice as much as gains make you feel good. This”
Richard H. Thaler, Misbehaving: The Making of Behavioral Economics
“This reflects a general tendency. People are more willing to lie by omission than commission. If I am selling you a used car, I do not feel obligated to mention that the car is burning a lot of oil, but if you ask me explicitly: “Does this car burn a lot of oil?” you are likely to wangle an admission from me that yes, there has been a small problem along those lines. To get at the truth, it helps to ask specific questions.”
Richard H. Thaler, Misbehaving: The Making of Behavioural Economics
“The evidence suggests that when people get a windfall—and this seems to be the way people think about their tax refund, despite it being expected—they tend to save a larger proportion from it than they do from regular income, especially if the windfall is sizable.”
Richard H. Thaler, Misbehaving: The Making of Behavioral Economics
“One overly simplistic idea is that we can improve student performance by just by giving financial incentives to parents, teachers, or kids. Unfortunately, there is little evidence that such incentives are effective, but nuances matter.”
Richard H. Thaler, Misbehaving: The Making of Behavioural Economics
“2. We can’t do evidence-based policy without evidence.”
Richard H. Thaler, Misbehaving: The Making of Behavioural Economics
“people are more likely to keep what they start with than to trade it, even when the initial allocations were done at random.”
Richard H. Thaler, Misbehaving: The Making of Behavioural Economics
“One overly simplistic idea is that we can improve student performance just by giving financial incentives to parents, teachers, or kids. Unfortunately, there is little evidence that such incentives are effective, but nuances matter. For example, one intriguing finding by Roland Fryer suggests that rewarding students for inputs (such as doing their homework) rather than outputs (such as their grades) is effective. I find this result intuitively appealing because the students most in need do not know how to become better students. It makes sense to reward them for doing things that educators believe are effective.”
Richard H. Thaler, Misbehaving: The Making of Behavioral Economics
“They have convinced their customers that the entire shopping experience is an orgy of bargain hunting, and go out of their way to reinforce that image.”
Richard H. Thaler, Misbehaving: The Making of Behavioral Economics
“even when you are talking to the boss, you need to warn of the threat of an impending disaster.”
Richard H. Thaler, Misbehaving: The Making of Behavioral Economics

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