Abstract
Thaler's ability for writing has resulted in a book that is a mix of his experiences as a faculty member, anecdotes from other economists he encountered along the journey, and a background in Behavioral Economics. Richard Thaler provides an analysis of how subjective factors influence decision-making in matters related to the economy and personal finances. The subject of "Misbehaving" is one of dominance and special interests; its power that economists were refusing and defending against the possibility of being irrational. Reading "Misbehaving" is recommended for those who want to understand how psychology influences decision-making with money and the economy, and for those who want to understand Behavioral Economics. This review will look further into evaluating the concept of irrationality and decision-making in behavioral economics.
Highlights
Thaler's ability for writing has resulted in a book that is a mix of his experiences as a faculty member, anecdotes from other economists he encountered along the journey, and a background in Behavioral Economics
Richard Thaler provides an analysis of how subjective factors influence decisionmaking in matters related to the economy and personal finances
Reading "Misbehaving" is recommended for those who want to understand how psychology influences decision-making with money and the economy, and for those who want to understand Behavioral Economics
Summary
The author discusses the content of 447 pages with very good humor and personal and didactic examples that make the reading quite dynamic and understandable. He analyses the implication of the Neoclassical Economic premise that almost everyone in the economy is rational, rather than the reality that individuals are often irrational and emotional. Thaler has set for himself the mission of filling the gap between theoretical concepts and reality His ideas spread widely in 2008 with the publication, of Nudge, a book he co-authored with Harvard attorney Cass Sunstein that quickly became a political phenomenon used as a kind of guide to manipulating people to behave in a certain way. Prospect theory is based on the following points: Diminishing Sensitivity: The frequency of receiving something can make its impact fall down
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