Friday, 15 December 2017

QoTD: How behavioural economics misbehaves

"McKenzie explained behavioural economics thus 'The moral of my sequence of classroom experiments is simple: You can easily prove that people are irrational if you tightly constrain the choice environment, barring choosers from knowing what others are doing, preventing choosers from correcting errant decisions, and ensuring that 'bad' choices do not have economic (and monetary) consequences, with subsequent effects on people’s incentives to learn from and act on their own and others’ errant choices. In such environments, drawing out irrational decisions is like shooting fish in a barrel'.”
~ from Mario Rizzo's review of Richard B. McKenzie's book Predictably Rational: In Search of Defenses for Rational Behavior in Economics [hat tip Jim Rose]

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