Misbehaving
Richard H. Thaler · 2015
Misbehaving (2015) is a book by Richard H. Thaler on business & strategy. Thaler's memoir-history of behavioral economics traces how a rebellious economist's list of human "anomalies", endowment effects, mental accounting, unfairness, self-control failures, dismantled the fiction of the rational Econ and reshaped policy.
A field-founder's insider story of how paying attention to the ways real people actually behave, the stuff economics called noise, rewrote the discipline and gave us the nudge.
Two of the ideas you’ll keep
The Clif summary of Misbehaving pulls out 7 insights. Here are the first two.
- Standard economics models a fictional creature Thaler calls the **Econ**, perfectly rational, unlimited willpower, no emotions, while the world is populated by **Humans**. The gap between the two isn't random noise; it's predictable, and that predictability is what makes behavior scientifically useful.
- The factors economists dismiss as irrelevant are precisely where the action is. Thaler labels them **Supposedly Irrelevant Factors (SIFs)**, a sunk cost, how a choice is framed, whether an option is the default, and the whole enterprise is the systematic study of when and why SIFs move decisions.
The other 5 — and the full 12-minute summary — are in the app.
What’s inside: 9 chapters
The whole summary runs about 12 minutes, read or listened to.
- Econs, Humans, and the List on the Blackboard
- Prospect Theory and the Endowment Effect
- Mental Accounting: Why Money Isn't Fungible
- Sunk Costs, Self-Control, and the Planner-Doer
- Fairness: The Constraint Markets Can't Ignore
- Behavioral Finance: Even Markets Misbehave
- The Equity Premium Puzzle and Myopic Loss Aversion
- Nudges: Save More Tomorrow and Choice Architecture
- Winning the Argument: The Future of Behavioral Economics
Finish Misbehaving tonight.
Read or listen to the full summary in about 12 minutes, then keep the ideas with a minute of review a day. Start with the 2-minute quiz — no card required.
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