Quotes from Richard H. Thaler

People think about life in terms of changes, not levels. They can be changes from the status quo or changes from what was expected, but whatever form they take, it is changes that make us happy or miserable.

quasi-hyperbolic discounting.

If private companies or public officials think that one policy produces better outcomes, they can greatly influence the outcome by choosing it as the default.

When your neighbor tells you that you can't lose money buying (fill in the blank here) that is probably a good sign that it is time to get out of that type of investment.

As we will soon see, it is not clear that patients gain a lot from the right to sue. At the same time, part of the current cost is passed onto patients, in the form of higher bills, and defensive medicine can be bad medicine for those who want good care.

Private relationships, intimate and otherwise, might be structured in many different ways, and the simple dichotomy between "single" and "married" does not do justice to what people might choose.

Many smokers, drinkers, and overeaters are willing to pay third parties to help them make better decisions.

individual risk taking, especially in the domain of risks to life and health.

Many start with unrealistic expectations about the chance of success: the vast majority believe their chance of success to be far above average, and a third or so believe their success is a sure thing (Cooper, Woo, and Dunkelberg, 1988)!

the planning fallacy—the systematic tendency toward unrealistic optimism about the time it takes to complete projects.

this book has been written by a certifiably lazy man.

Econs do not suffer from self-control problems, and so temptation is not a word that exists in the economists' lexicon. As a result, most of the world's regulators have not thought much about the problem. But when the dessert cart comes by, we humans often cave. The next thing we know we are fat.

But if it is crazy to turn down the 100 bets, the logic of Samuelson's argument is just reversed; you should not turn down one! Shlomo and I called this phenomenon "myopic loss aversion". The only way you can ever take 100 attractive bets is by first taking the first one, and it is only thinking about the bet in isolation that fools you into turning it down.

This scoring system has no effect on the grade you get in the course, but it seems to make you happier.

Bargains and Rip-Offs

The distinguished economist and philosopher Amartya Sen famously called people who always give nothing in this game rational fools for blindly following only material self-interest: "The purely economic man is indeed close to being a social moron. Economic theory has been much preoccupied with this rational fool.

Hundreds of studies confirm that human forecasts are flawed and biased. Human decision making is not so great either. Again to take just one example, consider what is called the "status quo bias," a fancy name for inertia. For a host of reasons, which we shall explore, people have a strong tendency to go along with the status quo or default option.

Imagine that you are about to purchase a jacket for ($125)[$15] and a calculator for ($15)[$125]. The calculator salesman informs you that the calculator you wish to buy is on sale for ($10)[$120] at the other branch of the store, located a twenty-minute drive away. Would you make the trip to the other store?

In many contexts defaults have some extra nudging power because consumers may feel, rightly or wrongly, that default options come with an implicit endorsement from the default setter, be it the employer, government, or TV scheduler. For this and other reasons, setting the best possible defaults will be a theme we explore often in the course of this book.

One way to salvage the Becker conjecture is to argue that CEOs, coaches, and other managers who are hired because they have a broad range of skills, which may not include analytical reasoning, could simply hire geeks who would deserve to be members of Becker's 10% to crunch the numbers for them. But my hunch is that as the importance of a decision grows, the tendency to rely on quantitative analyses done by others tends to shrink.

The bigger lesson is that once you understand a behavioral problem, you can sometimes invent a behavioral solution to it. Mental

it is thought to be somehow related to Adam Smith's invisible hand, the workings of which are both overstated and mysterious.

Like most aspects of mental accounting, setting up non-fungible budgets is not entirely silly. Be it with mason jars, envelopes, or sophisticated financial apps, a household that makes a serious effort to create a financial plan will have an easier time living within its means. The same goes for businesses, large or small. But sometimes those budgets can lead to bad decision-making, such as deciding that the Great Recession is a good time to upgrade the kind of gasoline you put in your car.

If learning is crucial, then as the stakes go up, decision-making quality is likely to go down.