Misbehaving: The Making of Behavioral Economics
Page 46
Roger and Me (film), 122
rogue traders, 84
Roll, Richard, 167, 208
Romer, David, 292
Rosen, Sherwin, 12, 15, 17, 21, 35, 42, 321
at behavioral economics debate, 159
Rosett, Richard, 17, 34, 46, 68, 73
Ross, Lee, 181
Ross, Steve, 167
Roth, Alvin, 130, 148
Royal Dutch Shell, 248, 249, 251
rules (in self-control), 106–9, 111
Russell, Thomas, 18, 203
Russell Sage Foundation, 177–78, 179, 181, 185
Russell Sage summer camps, 181–84, 199
Russian roulette, 13–14
Russo, Jay, 122
S&P 500, 232, 233
Sadoff, Sally, 354
safety, paying for, 13–14
St. Louis Rams, 290
St. Petersburg paradox, 27
sales, 61–62
Samuelson, Paul, 159
economics formalized by, 44, 94
financial economics work of, 208
“public goods” formalized by, 144–46
on rationality of repeat betting, 192–95, 197
time inconsistency and, 92
utility measured by, 89–90, 92, 99
Save More Tomorrow, 314–22, 318, 341
lack of randomized control trial test of, 338n
savings, 54
after-tax financial return on, 309–13
standard theories of, 309
savings, for retirement, 7, 9, 50, 52, 80, 345, 370
automatic enrollment, 313–22, 318
inertia in, 313
loss aversion in, 313–14
and marginal propensity to consume, 98
narrow framing of, 195–98, 196
nest egg amount and, 309–10
and present bias, 314
self-control and, 314
Scarcity (Mullainathan and Shafir), 58n, 366
Schachter, Stanley, 180
Schelling, Thomas, 12–13, 14, 37n, 100, 104n, 178
in Behavioral Economics Roundtable, 181
Schiphol International Airport, 326
Scholes, Myron, 208
Schwartz, Alan, 197
Science, 22, 319
scientific revolutions, 167–68, 169–70
secret sales, 119–20
Security Analysis (Graham and Dodd), 219–20
Seeger, Pete, 65
self-control, 54, 85–86, 99–111, 115
as about conflict, 103
retirement savings and, 314
and savings for retirement, 309
two selves in, 103–5
willpower and, 87–99, 363
self-interest, bounded, 258
selfishness, 145–46
Sen, Amartya, 145
sense of humor, 218, 219, 223
Shafir, Eldar, 58n, 67–68, 69, 71, 179, 257, 366
Shankar, Maya, 344
Shapiro, Jesse, 75–76, 357
Sharpe, William, 208, 226, 229
Shaton, Maya, 198
Shea, Dennis, 315–17
Shefrin, Hersh, 98, 104, 164–66, 167, 223–24
Shiller, Robert, 5n, 176, 242
in behavioral economics debate, 159, 167–68
in Behavioral Economics Roundtable, 181
behavioral finance workshop organized by, 236
and behavioral macroeconomics, 349
housing prices studied by, 235, 252
as president of AEA, 347
on variability of stock prices, 230–33, 231
Shleifer, Andrei, 175, 178
closed-end fund paper of, 240–43, 244
on limits of arbitrage, 249
Signal and the Noise, The (Silver), 292
Silva, Rohan, 330–33, 334
Silver, Nate, 47, 292
Simon, Herbert, 23, 29
in behavioral economics debate, 159, 162
Sinden, John, 148–49
skiing, 115–20, 138
Slovic, Paul, 21, 36, 48
slow hunch, 39–40
Small Business Administration, 351, 352n
Smith, Adam, 7, 51–52, 58, 87–88, 89, 103
Smith, Cliff, 206
Smith, Roger, 123
Smith, Vernon, 40, 41, 148, 149
“learning” critique of experimental economics, 153
snow shovels, 20, 64–65, 127–29, 133, 136, 137
Snyder, Daniel, 288–89, 290n
Social Security, 322
Society for Judgment and Decision Making, 180n
Society of Actuaries, 14
Soll, Jack, 75
Solow, Robert, 259
Soman, Dilip, 66–67
Sony, 135–36
sophisticated agents, 110–11
sporting events, tickets for, 18–19, 57–58
spreadsheets, 214n
Stanford Law Review, 258–59
Stanford University, 35–41, 125, 126, 185
statistical lives, 13
Statman, Meir, 104, 164–66, 167
status quo, 131
bias, 154
and Weber-Fechner law, 32
Staw, Barry, 65
Steinberg, Saul, 91
Stewart, Jon, 352
sticky wages, 131–32
Stigler, George, 37n, 87, 162–63
Stigler, Stephen, 296n
Stigler’s Law, 296n
Stiglitz, Joseph, 170
stock market, stocks, 7
beating, 206, 207
bonds vs., 191–92, 195–98, 196
calendar effects in, 174
cheap, 219–21
growth, 28, 214–15, 222, 227
October 1987 crash of, 7, 232
regression toward the mean, 222–23
value, 214–15, 220–21, 222, 227–28
variability of prices of, 230–33, 231, 367
“Stock Prices and Social Dynamics” (Shiller), 233
strikes, 372
Strotz, Robert, 99–100, 102, 108
Structure of Scientific Revolutions, The (Kuhn), 169
Stubhub.com, 18–19
stub value, 246, 246
Stulz, René, 243
Sufi, Amir, 78
suggested retail price, 61–63
Summers, Larry, 178, 239–40, 247
sunk costs, 21, 52, 64–73, 118, 180, 261
and revised Ultimatum Game, 266–67
Sunstein, Cass, 258, 260, 269, 322, 323–25, 330, 333, 343, 345
on ethics of nudging, 337n
Super Bowl, 139n, 359
supermarkets, 62n
supposedly irrelevant factors (SIFs), 9, 24, 315
budgets and, 74
luck on Deal or No Deal, 298
noise traders’ use of, 240
purchase location as, 61
in retirement savings, 310–11, 312, 315
and returns on investments, 196
sunk costs as, 267
tax cuts as, 350
surcharge, discount vs., 18
surge pricing, 136–38, 200n
surplus value, 285–86, 285, 286, 288
Susanne (game show contestant), 299–300
Sydney, Australia, 138n
Tarbox, Brian, 317–19, 321
tax cuts, 350–51
taxes, 165
compliance with, 334–36
and savings, 309–13
taxi drivers, hours worked by, 11, 199–201, 295
Taylor, Tim, 173n
technology bubble, 7, 78, 220, 234, 250, 252
teenage pregnancy, 342
Teichman, Doron, 269
10% club, 277–78, 293–94
test periods, 227
texting, 190n, 342
Thaler, Alan, 14
Thaler, Jessie, 129
Thaler, Maggie, 118n
theories, normative vs. descriptive, 25
theory-induced blindness, 93–94, 128
Theory of Games and Economic Behavior, The (von Neumann and
Morgenstern), 29
Theory of Interest, The (Fisher), 88–89
Theory of Moral Sentiments, The (Smith), 87–88
“THERE ARE IDIOTS” paper (Summers), 240–41
Thinking, Fast and Slow (Kahneman), 38, 103n, 109, 186
Thompson, Rex, 242
Tierney, John, 327
time, value of, 21
time-inconsistency, 92–93, 99
time-shares, 71
Tirole, Jean, 307
Tobin, James, financial economics work of, 208
tokens, 149–53, 151, 263, 264–65
Tories, see Conservative Party, U.K.
“Toward a Positive Theory of Consumer Choice” (Thaler), 46–47, 53–54, 104
transaction costs, 261, 262–63, 265, 266
endowment effect as, 266
transaction utility, 59–63, 66, 118
transparency, 337
Treasury Department, U.S., 311, 314–15, 343
Treisman, Anne, 36, 185
Tversky, Amos, 21, 22–23, 24, 29, 103n, 104, 105n, 125, 157, 162, 176, 201, 221, 261, 353, 357
and “as if” critique of behavioral economics, 46
in behavioral economics debate, 159–60
in Behavioral Economics Roundtable, 181
on changes in wealth, 30–31
equity premium puzzle studied by, 197–98
on extreme forecasts with flimsy data, 218, 219, 223
hypothetical choices defended by, 38, 82
illness and death of, xiii–xv, 187
on importance of stories, xiv–xv, 10
and “invisible handwave” argument, 51
lack of incentives in experiments of, 47–48
and “learning” critique of behavioral economics, 49
on long-shot odds, 80–81
Thaler’s first meeting with, 36–37
unambiguous questions studied by, 295–96
Wanner given advice by, 177
Tversky, Barbara, 36
Tversky, Oren, xiv–xv
Tversky, Tal, xv
Twain, Mark, 355
“two-pocket” mental accounting, 81–82
two-system view of mind, 103, 109
Uber, 136–38, 200n
Ultimatum Game, 140–41, 142, 160, 182, 261, 301
revised version of, 266–67
unemployment rate, 47
United Kingdom, 10, 11, 330–45
tax revenue in, 334–35
university endowment, 197–98
urinals, 326
USA Today, 328
utility, 28–29, 28
acquisition, 59–63, 66
transaction, 59–63, 66, 118
utility functions, 161
value function, 30–32, 31, 34, 58–59, 85
value managers, value investing, 214–15, 220–21, 222, 227–28
“Value of a Life, The” (Thaler), 12, 14–15
value of a life, 12–15, 21, 35
“Value of Saving a Life, The” (Thaler and Rosen), 15, 42
van den Assem, Martijn, 296, 300, 301
van Dolder, Dennie, 300, 301
variability of stock prices, 230–33, 231, 367
Varian, Hal, 170
Viñoly, Rafael, 270, 276
Vishny, Robert, on limits of arbitrage, 249
von Neumann, John, 29
wages, sticky, 131–32
Waldmann, Robert, 240
Wall Street Journal, 121–22, 135, 232
Walmart, 62n, 63
Wanner, Eric, 177–78, 181, 184
as founding funder of behavioral economics, 184
Washington Redskins, 279, 288–90
Washington Wizards, 19
Wason problem, 171–72
“Watching Scotty Die” (song), 177
wealth:
fungibility of, 98, 193n
levels of vs. changes in, 30–31
mental accounting of, 76–79
Wealth of Nations, The (Smith), 7, 87
Weber-Fechner Law, 32–33
Weil, Roman, 70
well-defined preferences, 48–49
What Works Network, 341
White, Jesse, 328–29
White House Social and Behavioral Sciences Team (SBST), 344
Williams, Ricky, 279, 280, 282–83
willow tree, and Coase theorem, 268
willpower, 87–99, 258, 363
effort required by, 108
Wilson, Russell, 290
windfalls, 311
wine, 17, 34, 46, 68–71, 72–73, 257
winner’s curse, in NFL draft, 280, 295
Winner’s Curse, The (Thaler), 175
World Cup, 326
Wright, Frank Lloyd, 270
Yahoo, 248n
Yao Ming, 271n
Zamir, Eyal, 269
Zeckhauser, Richard, 13–14, 178
in behavioral economics debate, 159
Zingales, Luigi, 274
ALSO BY RICHARD H. THALER
Quasi-Rational Economics
The Winner’s Curse: Paradoxes and Anomalies of Economic Life
Nudge: Improving Decisions About Health, Wealth, and Happiness
(with Cass R. Sunstein)
Copyright © 2015 by Richard H. Thaler
All rights reserved
First Edition
For information about permission to reproduce selections from this book,
write to Permissions, W. W. Norton & Company, Inc.,
500 Fifth Avenue, New York, NY 10110
For information about special discounts for bulk purchases, please contact
W. W. Norton Special Sales at specialsales@wwnorton.com or 800-233-4830
Book design by Chris Welch
Production manager: Louise Mattarelliano
The Library of Congress has cataloged the printed edition as follows:
Thaler, Richard H., 1945–
Misbehaving : the making of behavioral economics / Richard H. Thaler. — First edition.
pages cm
Includes bibliographical references and index.
ISBN 978-0-393-08094-0 (hardcover : alk. paper)
1. Economics—Psychological aspects. I. Title.
HB74.P8T527 2015
330.01'9—dc23
2015004600
ISBN 978-0-393-24677-3 (e-book)
W. W. Norton & Company, Inc.
500 Fifth Avenue, New York, N.Y. 10110
www.wwnorton.com
W. W. Norton & Company Ltd.
Castle House, 75/76 Wells Street, London W1T 3QT