Quotes About Decision-making

Our leaders keep saying phrases like, "Let the market decide." or "The market will get to the efficient outcome." Really? The market is a very flawed institution that does not deserve the nearly religious kind of endorsement of it that our leaders are eager to provide over and over again.

The capitalist organization of production must now be dissolved. Workers must become their own directors, receiving and distributing the surpluses they produce. They must become the collective decision-makers in productive enterprises, no longer the directed wage and salary receivers.

Der Triumph der Taktik über die Strategie hat unser Land gelähmt.

In all such instances of which I am aware, the Presidents do not think hard enough, carefully enough beforehand, about foreseeable, even likely consequences to their own effectiveness in office, looking down the line and around corners (xviii).

Os casais que concebem filhos que não desejam refletem os casais que querem filhos mas não podem ter. O problema destes últimos tem sido resolvido pelos ginecologistas com menor alarde e esforço. As pessoas autoritárias fazem mais objeções ao fato de as outras fazerem o que elas acham que não deve ser feito, ao invés de procurar realizar o que acham que devem.

On traditional economic theory: We do not play chess as if we were a grandmaster, invest as if we were Warren Buffett, or cook like an Iron Chef. It is more likely we cook like Warren Buffett, who loves to eat at Dairy Queen.

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.

Loss aversion helps produce inertia, meaning a strong desire to stick with your current holdings.

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.

In economics (and in ordinary life), a basic principle is that you can never be made worse off by having more options, because you can always turn them down. Before Thaler removed the nuts the group had the choice of whether to eat the nuts or not—now they didn't. In the land of Econs, it is against the law to be happy about this!

Markowitz's strategy can be viewed as one example of what might be called the diversification heuristic. "When in doubt, diversify.

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.

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.

First, never underestimate the power of inertia. Second, that power can be harnessed. 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.

Roughly speaking, losing something makes you twice as miserable as gaining the same thing makes you happy. In more technical language, people are "loss averse.

our understanding of human behavior can be improved by appreciating how people systematically go wrong.

One of the causes of status quo bias is a lack of attention. Many people adopt what we will call the "yeah, whatever" heuristic.

In complex situations, the Just Maximize Choices mantra is not enough to create good policy.

If you look at economics textbooks, you will learn that homo economicus can think like Albert Einstein, store as much memory as IBM's Big Blue, and exercise the willpower of Mahatma Gandhi. Really. But the folks that we know are not like that. Real people have trouble with long division if they don't have a calculator, sometimes forget their spouse's birthday, and have a hangover on New Year's Day. They are not homo economicus; they are homo sapiens.

2. We can't do evidence-based policy without evidence.

special case of this rule of thumb is what might be called the "1/n" heuristic: "When faced with 'n' options, divide assets evenly across the options."3 Put the same number of eggs in each basket.

people are more likely to keep what they start with than to trade it, even when the initial allocations were done at random.

What this means is that people do not assign specific values to objects. When they have to give something up, they are hurt more than they are pleased if they acquire the very same thing.