Michelle Baddeley: Behavioral economics: a very short introduction
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“We do not play chess like a grandmaster, invest like Warren Buffett, or cook like an Iron Chef. Not even ‘as if.’ It is more likely that we cook like Warren Buffett (who loves to eat at Dairy Queen).” This quote from economist and Nobel laureate Richard Thaler1 illustrates the fundamental problem of traditional economics: It assumes that everyone acts “as if” he or she were an expert. In reality, however, this is rarely the case. Humans often rely on instincts, utilize stereotypes, and misjudge probabilities. Behavioral economics aims to adjust for these inaccuracies.
In Behavioural Economics: A Very Short Introduction, Michelle Baddeley introduces the reader to behavioral economics and outlines how it revolutionizes economic models and methods. Thereby, she not only succeeds in providing the reader with an excellent overview of the topic but also in sparking intrigue within the reader to dig further into the subjects throughout the book.
Baddeley structures her short introduction in...