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To: Victor Fuchs who gave me a year
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15. Fairness Games 16. Mugs V. ENGA
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PREFACE Before we get started, here
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had written plenty of other strong
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1 Supposedly Irrelevant Factors Ear
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advice. Until very recently, other
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Humans. The good news is that we do
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now other countries around the worl
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2 The Endowment Effect I began to h
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y Schelling’s analysis, without a
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one. He also did not sell any of hi
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some modest health benefit but is e
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seen the sweater in the store and d
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efore Kahneman and Tversky came alo
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4 Value Theory After my day in the
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conceptual breakthrough offered by
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The way that von Neumann and Morgen
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The same is true in financial matte
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losses, as illustrated by the exper
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5 California Dreamin’ Sherwin Ros
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had not bothered to invent Hebrew e
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14. When I was not wandering the hi
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† There are, of course, exception
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One of the most prominent of the pu
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accordance with the rational econom
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more to give up the $ bet than the
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Jensen about his students, and Mike
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At some point I had to get this pap
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7 Bargains and Rip-Offs My friend M
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the object gained and then subtract
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always a sale going on. Most of us
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8 Sunk Costs Vince paid $1,000 to a
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you are keeping. Going to the event
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Suppose you bought a case of good B
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Strongly Strongly Mean: 2.88 Agree
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what I do “wackonomics,” a term
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on how much slack is in the budget.
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addressed by making the option of r
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10 At the Poker Table During my tim
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Kahneman and Tversky to run experim
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noticed that when a certain colleag
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ECON: In that case, you prefer to e
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he portrayed the topic as a struggl
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earlier economists such as Jevons a
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Yorker, March 29, 1976 © The Saul
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time, economists had been moving aw
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years and plans to leave no bequest
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much higher than a similar increase
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He devised a two-part plan to succe
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write a large check to someone you
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University of Rochester Graduate Sc
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less pleasurable. The only way to m
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the key papers are provided in the
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INTERLUDE
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Vermont or New Hampshire. Operation
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idea of committing to ski more ofte
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hundred dollars. A rebate seems to
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what I thought they should do. Firs
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14 What Seems Fair? Danny and Jack
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Jessie and her ever-present doll Jo
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for something falls, in this case l
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1990s. And what is it the bank thin
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My takeaway from these examples is
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price, for Saturday night at eight,
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Proposers would offer half, which w
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There is another class of games tha
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were due to some confusion on the p
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16 Mugs At some point during the Va
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a series of simple questions. Those
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subjects how much they like the goo
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The endowment effect experiments sh
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V. ENGAGING WITH THE ECONOMICS PROF
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offered to the first group are: Pol
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league crowd without seeming presum
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would no longer be irrelevant if di
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home field advantage. Shiller was t
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around the Earth. At the Chicago co
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articles were about ten to twelve p
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19 Forming a Team The “Anomalies
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invited three groups of people: dis
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Freud; Sigmund was his great-grandf
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would want to come. Fortunately, ov
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20 Narrow Framing on the Upper East
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short life expectancy, Amos and Dan
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one of the goals being to improve
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actually is. It is one of the few t
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accepting this parlay, and the chan
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Schwartz, now a professor of medica
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econometrics skills, to join us. Th
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VI. FINANCE: 1983-2003 Aside from t
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The EMH has two components, which a
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special issue of the Journal of Fin
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Make a guess before continuing. Rea
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guesses of 99 or 100; what were tho
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22 Does the Stock Market Overreact?
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percentile), and so forth. The othe
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whether a stock was cheap or expens
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etter the next game. Children of se
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23 The Reaction to Overreaction Wit
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even more anomalous! To rescue the
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24 The Price Is Not Right Recall th
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Shiller titled his paper “Do Stoc
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With the benefit of hindsight, it i
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I should stress that the imprecisio
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25 The Battle of Closed-End Funds S
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from NAV. While funds typically sel
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This fact rules out the possibility
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________________ * The only copy of
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offering, sold about 1% to a consor
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He could pay $95 and get one share
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Owen and I wrote an academic paper
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these warning signals and realized
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each generation has got to make its
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this point I had adopted the pedago
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and I kept expecting to look over a
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says: “This is, of course, a very
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Coase theorem worked in theory, whe
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shed its leaves late in the fall an
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winner.
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had the duty of negotiating with ne
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About a day after the draft order w
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I also put a bit of the blame on th
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MBA student, during my first year a
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who didn’t thought iPhone ownersh
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When Cade and I tracked down Mr. Mc
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the price of early picks rational,
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If this market were efficient, then
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How could the decision-makers in th
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Our relationship with the Redskins
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managerial ladder. All economists a
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30 Game Shows With all the research
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continuing to play, the contestant
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consider the role of “path depend
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- Page 276 and 277: Nick has made a nice sideline caree
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- Page 344 and 345: Macfie. Indianapolis: LibertyClassi
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- Page 350 and 351: INDEX Page numbers listed correspon
- Page 352 and 353: Binmore, Ken, 50 “Binmore continu
- Page 354 and 355: Daily Mail, 135 Daily Show, The, 35
- Page 356 and 357: ubbles created in, 40n, 206n with d
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- Page 362 and 363: of managers, 187-89, 190 myopic, 19
- Page 364 and 365: National Public Radio, 32, 305 natu
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two-system view of mind, 103, 109 U
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ALSO BY RICHARD H. THALER Quasi-Rat