Book Review: Misbehaving- The Making of Behavioral Economics
This book is written by Richard Thaler, the economist who helped develop Behavioural Economics. In it, he lays out the initial thoughts and ideas that led him to exploring the psychological aspects of economics, particularly in terms of consumer behaviour that could make it more suitable for 'Humans'. The book begins with the basic premise that there is a difference in the way someone with sound knowledge of economics thinks and how a normal human being thinks while making decisions. He differentiates between the two by calling them Econs and Humans and proposes that economic models make a lot of bad predictions because they are primarily designed for Econs . He He calls for an "enriched approach to doing economic research, one that acknowledges the existence and relevance of Humans". This thought is elaborated with a number of examples throughout the book. For instance, a company may not always consider losses to be an important factor while making b...