Combining economics and psychology to improve decisionmaking from "summary" of Misbehaving by Richard H Thaler
The key idea here is that we can use insights from psychology to improve economic decision making. Traditional economics assumes that people are rational, self-interested, and fully informed. But as we all know, that's not always the case. Sometimes we don't act in our own best interests, we are influenced by emotions, and we don't have all the information we need. This is where psychology comes in. By understanding how people actually behave - with all their quirks, biases, and limitations - we can develop better economic models and policies. For example, we can design choice architectures that nudge people towards making better decisions, like saving more for retirement or eating healthier. One of the main insights from psychology i...
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