- Page 6 and 7: CONTENTS Preface 1. Supposedly Irre
- Page 8 and 9: The foundation of political economy
- Page 10 and 11: devote his last months to playing t
- Page 12 and 13: I. BEGINNINGS 1970-78
- Page 14 and 15: points available 137 instead of 100
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- Page 18 and 19: to the farming example. Say scienti
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- Page 22 and 23: of identified lives at risk in the
- Page 24 and 25: B. Researchers at the university ho
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- Page 28 and 29: 3 The List The discrepancy between
- Page 30 and 31: that they should take on risky proj
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- Page 36 and 37: A utility function of this shape im
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- Page 42 and 43: ________________ * I asked Danny wh
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- Page 50 and 51: 6 The Gauntlet I accepted the job a
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perhaps to continue the debate in p
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Incentives Economists put great sto
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At a conference organized for gradu
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have gotten rich selling the advice
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II. MENTAL ACCOUNTING: 1979-85 Afte
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and it is unrealistic to think that
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and $4.10. These results show that
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etailers such as Walmart and Costco
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school if she had to wear a dress.
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while, but may be forgotten eventua
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he can drink the rest as “free.
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It is time for two confessions. Alt
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9 Buckets and Budgets In those inte
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mason jar in the kitchen. Like the
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consumption, especially of consumer
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discussed in chapter 4, if you ask
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taking preferences when there is no
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III. SELF-CONTROL: 1975-88 Prospect
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11 Willpower? No Problem Economists
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mend his leaky roof. When it rained
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FIGURE 4. View of the World from 9t
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trip from there to Shanghai is even
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models of the consumption function
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in that case, he will not need to a
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12 The Planner and the Doer When I
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About ten years later, as an aftert
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attle between our passions and our
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deal with this problem? Let’s ass
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e more expensive in the summer. But
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need a planner to have established
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13 Misbehaving in the Real World If
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way to grow the customer base. But
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unravel Al’s pricing strategy for
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marketing department, and he wanted
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IV. WORKING WITH DANNY: 1984-85 Aft
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We decided to simplify the presenta
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example, consider this pair of ques
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and it is quite another to ask whet
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jack up the price? Someone (or poss
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would then serve as a cap on the su
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15 Fairness Games One question was
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someone who behaves in a manner the
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Economists, psychologists, and soci
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anyone could take all of it, someon
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only 38% wanted to buy the ticket.
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Since both the values and the token
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Recall that we predict about eleven
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kind of enjoyed being “promising.
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17 The Debate Begins Behavioral eco
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Arrow noted that there could be man
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People seemed to like the discussio
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increase dividends when they are co
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18 Anomalies An important aspect of
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Consider the following problem. You
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for the shares of small companies.
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More recently, he has been at the f
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field—encouraging because such lu
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figure in the behavioral economics
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activity to a vibrant part of mains
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transaction, or are they pooled int
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projects would you want to undertak
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The previous stories illustrate Dan
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he does not like one bet, and we ar
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FIGURE 9 For our Human subjects, th
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oards on a regular basis, the annua
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conversation, unless your spouse is
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21 The Beauty Contest It is difficu
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today. If the pros can’t beat the
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profits of existing investments, wh
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to as the “beauty contest.” Thi
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________________ * When asked which
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higher returns than bonds (the equi
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Would investors behave the same way
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elatively short time period were co
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The results strongly supported our
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actually may go bankrupt. But in ou
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titled “Contrarian Investment, Ex
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ule that the predictions can’t va
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fashion trends. Hemlines go up and
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a chance to cash in. The same is tr
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thriving and mainstream component o
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making that trade are small, money
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not qualify as news, such as seeing
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colleague. To this day I do not kno
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26 Fruit Flies, Icebergs, and Negat
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over $95. Wow! Investors did seem t
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years, there were two kinds of shar
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When it comes to the EMH as a descr
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VII. WELCOME TO CHICAGO: 1995-PRESE
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27 Law Schooling I spent the academ
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have a similar effect. The obvious
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poor predictions. At this point Pos
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Recall that the first stage of the
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their beloved theories they were me
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paternalism. Instead, we noted that
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28 The Offices Normally the Booth S
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would pick before the assistant pro
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It took a few days for the new meas
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29 Football Of the many unique aspe
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was worried that Williams would be
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The other thing to notice about thi
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Williams, involves explicit opportu
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etter, but by how much? If you subt
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this year and you can get a second-
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then, we were pretty sure they had
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three plays, it has the option of t
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mention are similar even if we use
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arise in buying a house, choosing a
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The size of the bank offer depends
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end. In the last round there were t
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pairs of players to study. Our firs
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that people were willing to drive a
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________________ * I agreed but wit
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31 Save More Tomorrow Given the att
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to make a contribution that counts
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options unless they change jobs and
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and most plans now choose a fund th
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Armed with these results, we tried
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two factors that are combined in th
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32 Going Public When I next saw Cas
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egulations. We require children to
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donors.” The findings of Johnson
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33 Nudging in the U.K. In July of 2
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he was the Cabinet Secretary, the t
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joined by David and another team me
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increased the number of taxpayers w
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small enough that the experiment wo
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eminders in the form of a text can
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social sciences. The whole point of
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Conclusion: What Is Next? It has no
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illustrates how evidence-based econ
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mitigating the downside risk to ent
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informing texts increased student p
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talking to the boss, you need to wa
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NOTES xi “The foundation of polit
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63 JC Penney claimed the end price
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121 excess inventory: Another facto
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Chapter 19: Forming a Team 176 game
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232 one of those papers . . . prese
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saving because they induced some pe
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BIBLIOGRAPHY Agarwal, Sumit, Mi Dia
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Commitment: A Re-examination of Sta
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———. 2014. “A Five-Factor A
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Hood, Donald C., Paul Andreassen, a
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Available at: http://www.nytimes.co
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Journal of Financial Economics 3, n
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Nestor E. Terleckyj, ed., Household
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LIST OF FIGURES Unless otherwise no
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this book, and he made it smarter,
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Ashenfelter, Orley, 68, 70, 257 Asi
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debate on behavioral economics at,
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“Economists Free Ride: Does Anyon
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football, see National Football Lea
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housing prices, 235-36, 236 Houston
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Kitchen Safe, 107n Kleidon, Allan,
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house money effect, 81-82, 83-84, 1
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Oullier, Olivier, 333 outside view,
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ebates, 121-22, 363 recessions, 131
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Shefrin, Hersh, 98, 104, 164-66, 16
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Teichman, Doron, 269 10% club, 277-
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willpower, 87-99, 258, 363 effort r
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Copyright © 2015 by Richard H. Tha