Wednesday, September 23, 2015

Market Skeptics: Akerlof and Shiller's "Phishing for Phools"



Akerlof and Shiller between them have as many Nobel-Branded Prizes as Marie Curie did, so each of them are half a Curie.

Basically, this book tries to take the biases that are built into humans and look at economics from the top-down with behavioral factors, instead of from the bottom up. It made me make a joke about behavioral economics without microfoundations.

The examples the authors use show how people take advantage of people’s not being poerfect economic actors and instead work against their best interests. They like using Cinnobon as an example of how this market works, in that someone would be out there with a similar product. You choose a fatty roll not because you have thought through the transaction, you have been Phished.

If you haven’t read much behavioral econ, it is a good start in spite of the goofy title. My only real complaint is that the chapters aren’t fleshed out. The content of the book is only like 175 pages and that covers like 13 sections. I should have checked out the almost 100 pages of notes plus index which makes the book feel more hefty - I was at the end when I realized i should have been reading the book like “Infinite Jest”.