Quotes About Behavioral economics

shed new light on the planning fallacy

THE VALUES ARE UNEQUAL BECAUSE OF LOSS AVERSION

Winning at money is 80 percent behavior and 20 percent head knowledge. What to do isn't the problem; doing it is. Most of us know what to do, but we just don't do it. If I can control the guy in the mirror, I can be skinny and rich.

Irrational exuberance

Behavioral economics tells us that people often focus too much on the wrong things, and tend to focus on aspects of the job that are salient. So, for example, the pay is salient, especially the starting pay.

That's the world we live in: when it comes to economics, people have emotions; it's not like chemistry or physics.

It is true that from a behavioral economics perspective we are fallible, easily confused, not that smart, and often irrational. We are more like Homer Simpson than Superman. So from this perspective it is rather depressing. But at the same time there is also a silver lining. There are free lunches!

The combination of loss aversion with mindless choosing implies that if an option is designated as the "default," it will attract a large market share. Default options thus act as powerful nudges.

you want to nudge people into socially desirable behavior, do not, by any means, let them know that their current actions are better than the social norm.

The purely economic man is indeed close to being a social moron. Economic theory has been much preoccupied with this rational fool.

A nudge, as we will use the term, is any aspect of the choice architecture that alters people's behavior in a predictable way without forbidding any options or significantly changing their economic incentives.

Libertarian paternalism is a relatively weak, soft, and nonintrusive type of paternalism because choices are not blocked, fenced off, or significantly burdened.

The core premise of economic theory is that people choose by optimizing.

[There will be movement toward] behavioral economics... [which] involves study of those aspects of men's images, or cognitive and affective structures that are more relevant to economic decisions.

Money is 80% behavior, 20% head knowledge. It's what you do, not what you know.

I think markets will never be efficient because of human nature.

All economic movements, by their very nature, are motivated by crowd psychology.

Influence: The Psychology of Persuasion

All taxes discourage something. Why not discourage bad things like pollution rather than good things like working?

The lesson of my field, behavioral economics, is that we need to understand the ways in which we differ from the rational human assumed in standard economic theory.

Behavioral economics offers a plausible explanation for overreactions by the market. For example, a long period of bad performance can lead to stereotyping.

Wealth, too, is often separated into various mental accounts. At the bottom of this hierarchy sits the money that is easiest to spend: cash.

PROBLEM 1. Assume yourself richer by $300 than you are today. You are offered a choice between A. A sure gain of $100, or [72%] B. A 50% chance to gain $200 and a 50% chance to lose $0. [28%] PROBLEM 2. Assume yourself richer by $500 than you are today. You are offered a choice between A. A sure loss of $100, or [36%] B. A 50% chance to lose $200 and a 50% chance to lose $0.

Unrealistic optimism is a pervasive feature of human life; it characterizes most people in most social categories. When they overestimate their personal immunity from harm, people may fail to take sensible preventive steps. If people are running risks because of unrealistic optimism, they might be able to benefit from a nudge. In fact, we have already mentioned one possibility: if people are reminded of a bad event, they may not continue to be so optimistic.