Alfred P. Sloan professor of behavioral economics | wrong car | Dan Ariely | MIT
The Way We’re Wired
by
American Way Staff
DON'TBEPREDICTABLEDan Ariely, PhD, the
Alfred P. Sloan professor of behavioral economics at MIT, spends
plenty of time studying what makes people tick. If you really want
to know why you can't save money or stick to that diet, or why you
bought the wrong car (or married the wrong person), check out his
new book Predictably Irrational: The Hidden Forces That Shape
Our Decisions (HarperCollins, $26). -- Chris Tucker
What's the most
important difference between traditional economics and behavioral
economics?Conventional economics assumes that we
are all rational. It assumes that every time we face a choice, we
consider all the available options, perform a cost-benefit
analysis, and follow the best possible path of action. Behavioral
economics says that we act irrationally again and again because
that's how our brains are wired. So, we make mistakes and work
against our own interests.
That seems a bit
depressing.Yes, but only by truly understanding our
irrationality can we think about how to fix it. That's the great
hope of behavioral economics.
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