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Top 10 Thoughts From Richard Thaler's The New Behavioral Economics



1. A real person is seriously different from homo economics! The behavior of a real person is affected by cognitive distortions. Therefore, it is only limitedly rational.

2. Behavioral economics is not about what should be, but about what really happens. Behavioral economics is focused on developing descriptive theories (as is the case), while classical economics is about normative theories (as it should be).

3. A person is very bad at counting in his mind! The theory of rational calculation shows that people evaluate the usefulness of the transaction and its quality, that is, they take into account factors that are unimportant to a reasonable homo economics.

4. For a real person, the issue of justice is very important! Unlike homo economics, he can even take actions that are not economically beneficial for himself, if he considers it fair.

5. A person does not like to part with property! Even if he doesn't need her. A real person cannot understand the concept of "sunk cost" and accumulates unnecessary shoes in the closet.

6. Man is very foolish when he loses! He takes too many risks in an attempt to recoup (when playing in a casino, investors in the last quarter). Also, the money won is not perceived as one's own, and it is easier to lower it.

7. An ordinary person often suffers from a one-sided view of the world! This cognitive bias can lead to bad decisions, such as only looking at short-term effects but missing long-term ones.

8. The average person does not have sufficient willpower and finds it difficult to save for retirement (problem of planner and doer).

9. Knowing economics too well can affect your ethics! People who have received a professional economic education are more likely to act like homo economics, that is, they rely on economic theory and forget ethics.

10. The invisible hand of the market does not exist. The actions of some unreasonable people are not balanced by the actions of others - we are all similar to each other in our unreasonableness.



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