Enter your mobile number or email address below and we'll send you a link to download the free Kindle App. Then you can start reading Kindle books on your smartphone, tablet, or computer - no Kindle device required.
To get the free app, enter your mobile phone number.
Other Sellers on Amazon
+ $3.99 shipping
+ $3.99 shipping
+ $3.99 shipping
Misbehaving: The Making of Behavioral Economics Paperback – June 14, 2016
|New from||Used from|
The Amazon Book Review
Author interviews, book reviews, editors picks, and more. Read it now
Frequently bought together
Customers who bought this item also bought
Customers who viewed this item also viewed
Misbehaving is Richard H Thaler s arresting frequently hilarious account of his struggle to bring economics back down to earth and transform the way we think about ourselves and our world Coupling recent discoveries in human psychology with a practical understanding of incentives and market behavior this founding father of behavioral economics Chicago Tribune opens up new ways to look at everything from household finance to TV game shows the NFL draft and businesses like Uber Misbehaving reveals how the study of human miscalculations can help us make smarter decisions in our lives our businesses and our governments Book jacket Richard H Thaler has spent his career studying the radical notion that the central agents in the economy are humans predictable error prone individuals Misbehaving is his arresting frequently hilarious account of the struggle to bring an academic discipline back down to earth and change the way we think about economics ourselves and our world Traditional economics assumes rational actors Early in his research Thaler realized these Spock like automatons were nothing like real people Whether buying a clock radio selling basketball tickets or applying for a mortgage we all succumb to biases and make decisions that deviate from the standards of rationality assumed by economists In other words we misbehave More importantly our misbehavior has serious consequences Dismissed at first by economists as an amusing sideshow the study of human miscalculations and their effects on markets now drives efforts to make better decisions in our lives our businesses and our governments Coupling recent discoveries in human psychology with a practical understanding of incentives and market behavior Thaler enlightens readers about how to make smarter decisions in an increasingly mystifying world He reveals how behavioral economic analysis opens up new ways to look at everything from household finance to assigning faculty offi
Top customer reviews
There was a problem filtering reviews right now. Please try again later.
Misbehaving is a thoroughly enjoyable read, both comprehensive and replete with historical context, but "neither a treatise nor a polemic" as prefaced by Thaler. Instead, it is a memoir and a chronological history on the rise of behavioral economics as a legitimate discipline, making it an excellent introduction to the field. The book is lengthy, an un-lazy 358 pages, but an easy read because of Thaler's self-deprecating style and numerous examples that are both funny and informative (like oenophile mental accounting). My favorite illustrative anecdote, however, was the kerfuffle that ensued among the "efficient market" professors at the University of Chicago when it came time to hold a lottery on allocating offices in their new academic building - hilarious.
I got hooked on behavioral economics almost 20 years ago at a conference held on the topic at Harvard's Kennedy School, featuring Richard Thaler, Richard Zeckhauser, Arnie Wood and others. The seeds planted from that fascinating seminar led me to be a lifelong student of this emerging, multi-disciplinary field and the importance of metacognition - quite literally, thinking about thinking. For an alcoholic, admitting you have a problem is the first step towards recovery. Analogously, it is impossible to temper evolutionarily prewired heuristics and biases unless you have studied them - and even then, it is too easy to 'fall off the wagon.' Anchoring, myopic loss aversion, overconfidence and hyperbolic discounting are all pervasive, but you have to understand the nature of these inherent biases to have any chance of counteracting them in your own behavior, both personally and professionally. As an institutional money manager overseeing billions of dollars in client assets, the lessons learned from behavioral finance have - unequivocally - been a key source of competitive advantage for me in an otherwise fairly efficient market.
From a personal standpoint, the useful lessons are also manifold and overlap with research on happiness and the value of rich experiences over accumulating more 'stuff.' Specifically, understanding the siren song of transaction utility (i.e. bargains) vs. acquisition utility (the 'consumer surplus') offers great insight on how to spend money. As Thaler notes: "For those who are at least living comfortably, negative transaction utility can prevent our consuming special experiences that will provide a lifetime of happy memories, and the amount by which the item was overpriced will long be forgotten. Good deals, on the other hand, can lure all of us into making purchases of objects of little value." Learn this lesson and you will be more likely to scalp an expensive ticket to the 'last' Rolling Stones tour than buy a fancy new jacket that is enticingly on sale, but will eventually gather dust in the back of your closet (Note: this also dovetails nicely with Buddhist philosophy around impermanence and craving - see "Hooked! Buddhist Writings on Greed, Desire, and the Urge to Consume" by Shambhala).
An excellent complementary read to Misbehaving, for those interested in the evolutionary drivers of behavioral biases, is "Kluge: The Haphazard Construction of the Human Mind" by Gary Marcus. Likewise, Nassim Taleb's brilliant "Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets" is also a highly relevant read. Finally, for anyone with an interest in the applied behavioral field of 'choice architecture,' Thaler's earlier book with Cass Sunstein, "Nudge: Improving Decisions About Health, Wealth, and Happiness" is also thought-provoking. As a registered libertarian, I can honestly say that I have no problem with Thaler's view towards 'nudging' people to better outcomes through choice architecture, despite predictable criticisms of 'libertarian paternalism' as Orwellian (see Robert Williams' letter in WSJ - 5/23/15). Thaler clarifies the nudge objective as trying to "influence choices in a way that will make the choosers better off, as judged by themselves."
This is a very intimate book - reading Misbehaving, one is left with the wonderful feeling they've spent a long weekend with Thaler hearing about the history and rise of behavioral finance, over multiple bottles of wine, and all while being peppered with entertaining personal references and anecdotes.
I won't summarize the wealth of evidence presented (with clarity and grace) in the book. Rather, I will make five general points that will suffice, I think, to entice the undecided reader to take up this good book.
1. This is Kuhnian book. It tells a story of a paradigm shift in the field of economics, from the initial hostility to the reticent acceptance and later to the widespread celebration of behavioral economics (more than ten of its main exponents have been awarded with the Nobel prize).
2. Behavioral economics is already making a dent in public policy. In England and elsewhere, policy makers have embraced some of its prescriptions to tackle various social problems, ranging from obesity to tax evasion. There is a perverse side of behavioral economics though. There are good nudges and bad nudges. Thaler himself sometimes sounds as an expert and unrepentant manipulator (see chapter 13 for example).
3. Economists can no longer ignore the (empirical) relevance of a set of behavioral ideas: loss aversion, the endowment effect, mental accounting, hyperbolic discounting, fairness preferences and narrow framing. "Humans do not have the brains of Einstein (or Barro), nor do they have the self-control of an ascetic Buddhist monk. Rather, they have passions, faulty telescopes, treat various pots of wealth quite differently, and can be influenced by short-run returns in the stock market."
4. William Baumol's early critique of behavioral economics in the sense that it should move beyond the discovery of anomalies to a more constructive agenda is still relevant. Some parts of the book are just anomaly-mining followed by ex post theorizing.
5. While reading the book, I often remembered a famous dictum by novelist (and also Nobel laurate) Elias Canetti: "there aren't the most profound ideas which have often the greatest influence." This book shows that simple ideas can indeed be quite influential.