McKenzie explained behavoural economics thus “The moral of my sequence of classroom experiments is simple: You can easily prove that people are irrational if you tightly constrain the choice environment, barring choosers from knowing what others are doing, preventing choosers from correcting errant decisions, and ensuring that “bad” choices do not have economic (and monetary) consequences, with subsequent effects on people’s incentives to learn from and act on their own and others’ errant choices. In such environments, drawing out irrational decisions is like shooting fish in a barrel.”
by Mario Rizzo
This is the time of the year that various publications recommend Christmas books or the best books of 2010. (I have never known what a Christmas — or summer — book is. Are they supposed to be light reading? I don’t believe in reading “light.” When I am in the mood for that, I watch TV.) In any event, I have a serious book to recommend.
Every so often a brilliant book comes out on a topic of great academic importance that is in danger of not getting the attention it deserves. I am thinking about Predictably Rational: In Search of Defenses for Rational Behavior in Economics by Richard B. McKenzie.
View original post 358 more words