losses are roughly twice as painful as gains are pleasurable, a finding that has been replicated numerous times over the years.

Stocks tend to go up on Fridays and down on Mondays. January is a good month in which to hold stocks, particularly the early part of the month, and especially for the shares of small companies. Finally, the days before holidays, often Fridays, are particularly good.

The Weber–Fechner Law holds that the just-noticeable difference in any variable is proportional to the magnitude of that variable.

The hospitals stand in for the concept Schelling calls a “statistical life,” as opposed to the girl, who represents an “identified life.” We occasionally run into examples of identified lives at risk in the real world, such as the thrilling rescue of trapped miners. As Schelling notes, we rarely allow any identified life to be extinguished solely f

The fact that a loss hurts more than an equivalent gain gives pleasure is called loss aversion. It has become the single most powerful tool in the behavioral economist’s arsenal.

“the three bounds”: bounded rationality, bounded willpower, and bounded self-interest.

Humans have limited time and brainpower. As a result, they use simple rules of thumb—heuristics—to help them make judgments. An example would be “availability.” Suppose I ask you if Dhruv is a common name.

Adam Smith famously visited a pin factory to see how manufacturing worked.

One solution to this problem is to aggregate investments into a pool where they can be considered as a package.