Misbehaving: The Making of Behavioral Economics

“choice architecture” to describe what we were trying to do. In curious ways, simply having that phrase to organize our thoughts helped us create a checklist of principles for good choice architecture, with many of the ideas borrowed from the human design literature. Designing good public policies has a lot in common with designing any consumer pro

The second asks how much cash you would demand to increase the risk of dying by the same amount.

Our model is really based on a metaphor. We propose that at any point in time an individual consists of two selves. There is a forward-looking “planner” who has good intentions and cares about the future, and a devil-may-care “doer” who lives for the present.

Kahneman and Tversky focus on changes because changes are the way Humans experience life.

As we have seen throughout this book, treating all money as the same, and also as the primary driver of human motivation, is not a good description of reality.

Giving up the opportunity to sell something does not hurt as much as taking the money out of your wallet to pay for it.

gain gives pleasure is called loss aversion. It has become the single most powerful tool in the behavioral economist’s arsenal.

good rule to remember is that people who are threatened with big losses and have a chance to break even will be unusually willing to take risks, even if they are normally quite risk averse.

The planner, in contrast, is completely altruistic. All she¶ cares about is the utility of the series of doers.