Behavioral economics as interpretive economics. A review of Daniel Kahneman: Thinking, fast and slow. Farrar, Straus and Giroux, New York, 2011. 512 pp., index, ISBN 9780374275631, $30.00
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Thinking, Fast and Slow is a book about how people think−how the mind interprets information given to it. Daniel Kahneman shared the 2002 Economics Nobel with Vernon Smith; he is a psychologist by training and one of the founders of behavioral economics. The book takes us through different phases in his career, each of which focuses on an aspect of how people’s “machinery of cognition” helps them make sense of the world (or fails to do so). Thinking, Fast and Slow has received great accolades, with The Economist, The New York Times Book Review, and The Wall Street Journal including it on their 2011 best book lists. I will focus on issues relevant to readers of the RAE and the opportunities Kahneman’s research program presents, rather than an in-depth analysis of the book because there are a large number of reviews for general readers.
Kahneman breaks the book into five sections, mapping onto five of Kahneman’s research projects in roughly chronological order. In first nine chapters,...
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