Book Review - Misbehaving: The Making of Behavioral Economics

Abstract

Traditional economics assumes that market forces directed by the rational forces shape economic activity in the economy. Nevertheless, in real times, people generally succumb to biases and make decisions that deviate from the assumption of rationality. Hence, people do not behave expectedly and simply misbehave. Richard Thaler in his book, Misbehaving: The Making of Behavioral Economics brings in hardcore application of economics and its deviations from the economic theories while penning his experience of understanding economics as a student and as an academician. Coupling the recent behavior in human psychology with a practical understanding of market behavior, Thaler, co-author of the seminal work Nudge entertains the reader through the fun way, but yet gives a highly intellectual comprehension of various aspects of behavioral economics - an un-dismal science. The book brings in new lessons about how to change the way people think about things, especially when they have a lot invested in maintaining the status quo.