Misbehaving: The Making of Behavioral Economics

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Roam capture metadata — Author: Richard Thaler · Reading Status: Books Read · Source: https://medium.com/@kwharrison13/2017-in-books-b2316c63784a · Recommended By: Ty Turley Tim Riser · Tags: #Books

• ==Highlighted Quotes==
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• “My laziness, he claims, means I only work on questions that are intriguing enough to overcome this default tendency of avoiding work. Only Danny could turn my laziness into an asset.”
• Quoting Donald McIntosh — “The idea of self-control is paradoxical unless it is assumed that the psyche contains more than one energy system, and that these energy systems have some degree of independence from each other.”
• “Most of us realize that we have self-control problems, but we underestimate their severity. We are naive about our level of sophistication.”
• “Take a moment to absorb that: we should ignore the reasons why people do things, not because they are uninteresting, but because they are too interesting.”
• “Managerial decision-making was driven by two countervailing, but not necessarily offsetting biases: bold forecasts and timid choices.”
• “In order to get managers to take risks, it is necessary to create an environment in which those managers will be rewarded for decisions that were value-maximizing ex ante, that is, with information available at the time they were made, even if they turn out to lose money ex post. Implementing such a policy is made difficult by hindsight bias.”
• Stock picking in a nut shell — “Professional investment may be likened to those newspaper competitions in which the competitors have to pick out the six pretties faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole: so that each competitor has to pick, not those faces which he himself finds prettiest, but those which he thinks likeliest to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view. It is not a case of choosing those which, to the best of one’s judgement, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be.”
• “If policy-makers simply take it as a matter of faith that prices are always right, they will never see any need to take preventive action.”
• “Yes, it is true that we think that most people would like to have a comfortable retirement, but we want to leave that choice up to them. We just want to reduce what people would themselves call errors.”
• “You don’t have to amplify the payoff of risk to gain success in this country, you need to soften the damage of risk.”
• “Teachers who are given a bonus at the beginning of the school year that must be returned if they fail to meet some target improve the performance of their students significantly more than teachers who are offered an end-of-ear bonus contingent on meeting the same goal.”
• Quoting Mark Twain — “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”