rthaler

When judges warn jurors to ignore something that is almost certainly useless, based on the research on the hindsight bias. But I'm not sure how to fix that.

At the end of MISBEHAVING, I note that macro is the domain of economics where behavioral economics has its least impact.

A fact that I bemoan.

And I hope that the next generation of young behavioral economists will take up the topic of behavioral macro seriously. The recent financial crisis is a good illustration of how desperately we need to re-think macro.

Some alcoholics choose to take the drug Antabuse.

Which has the effect of making you sick if you ingest alcohol.

Standard economic models predict that no one would ever use such a drug. Because it makes them sick, when they ingest their favorite beverage. But it illustrates that sometimes people are aware of their weaknesses, and take steps to remedy them, like setting our alarm clocks in the morning.

I think the subfield of economics where the behavioral approach has had its largest impact is surprisingly in financial economics. I say "surprisingly" because 30 years ago, people thought it would've been impossible to find any trace of misbehaving in financial markets. But the debate between the efficient market advocates and behavioral researchers has become an important feature of the ongoing research in this field.

My goal is for behavioral economics as a discipline to eventually disappear.

Because economics will have become as behavioral as it needs to be.

Standard economic models work well for easy decisions that people get to practice often, such as how much milk to buy when you go to the grocery store. They fail for complex large decisions that are done infrequently, like buying a home or choosing a career or a spouse.