Professor Richard Thaler is to be congratulated on his receipt of the Nobel Prize for Economics last year. At least once a year economics and economists appear on the positive side of the mainstream media. I am perturbed however, by the widespread discussion in the media of the current buzzword, irrationality.
The “new” idea, and the one for which Thaler won the Nobel, is that contrary to the classical approach to the analysis of consumer behavior (with the implicit assumption of rationality), many modern economists contend that much (perhaps most) decision making is, in fact, irrational. The underlying reason for amending the “old” model is the application nowadays of the insights into consumer behavior provided by psychology—hence the appellation, behavioral economics. The attempt is to render modern economic thinking more realistic.
I beg to differ. My contention is that irrationality
Get access to this article, plus the entire archive, by subscribing.