Priceless: The Myth of Fair Value

priceless-poundstone

Priceless: The Myth of Fair Value (and How to Take Advantage of It)

by William Poundstone

Traditional economics assumes people engage in rational transactions. Not surprisingly, people make irrational decisions all the time.  In Priceless, William Poundstone draws from research in psychophysics (the study of sensory perceptions) and behavioral economics to explore the subject of pricing. Concepts such as anchoring, priming, and prospect theory (adaptation, loss aversion, certainty effect) are explained. Continue reading

Nudge

nudge

Nudge: Improving Decisions About Health, Wealth, and Happiness

by Richard H. Thaler and Cass R. Sunstein

Based on behavioral economics, Nudge is about “choice architecture.” Sometimes people don’t have enough information or expertise to make a good decision. Other times they may be too busy to think about it, so they rely on intuition or heuristics (rules of thumb and biases).  Choice architects can improve decision making by nudging people in the right direction. Continue reading