Misbehaving: The Making of Behavioral Economics

Richard H. Thaler

May 2015 · W. W. Norton & Company

About this ebook

Winner of the Nobel Prize in Economics

Get ready to change the way you think about economics.

Nobel laureate Richard H. Thaler has spent his career studying the radical notion that the central agents in the economy are humans—predictable, error-prone individuals. Misbehaving is his arresting, frequently hilarious account of the struggle to bring an academic discipline back down to earth—and change the way we think about economics, ourselves, and our world.

Traditional economics assumes rational actors. Early in his research, Thaler realized these Spock-like automatons were nothing like real people. Whether buying a clock radio, selling basketball tickets, or applying for a mortgage, we all succumb to biases and make decisions that deviate from the standards of rationality assumed by economists. In other words, we misbehave. More importantly, our misbehavior has serious consequences. Dismissed at first by economists as an amusing sideshow, the study of human miscalculations and their effects on markets now drives efforts to make better decisions in our lives, our businesses, and our governments.

Coupling recent discoveries in human psychology with a practical understanding of incentives and market behavior, Thaler enlightens readers about how to make smarter decisions in an increasingly mystifying world. He reveals how behavioral economic analysis opens up new ways to look at everything from household finance to assigning faculty offices in a new building, to TV game shows, the NFL draft, and businesses like Uber.

Laced with antic stories of Thaler’s spirited battles with the bastions of traditional economic thinking, Misbehaving is a singular look into profound human foibles. When economics meets psychology, the implications for individuals, managers, and policy makers are both profound and entertaining.

Shortlisted for the Financial Times & McKinsey Business Book of the Year Award

Ratings and reviews

I find the concepts & implications of behavioral economics fascinating; and this book is like an historical journey that maps out some topical origins from the perspective of a main historical contributor. While I've read academic papers as well as academic "books" (aka. collections of papers with a new 'introduction' explaining the common theme of the papers), I think this author did a great job of making this academic journey more readable/entertaining. The author also did a great job of merging academic concepts with relatable stories (i.e., utilizing a story about a willow tree with a point he's making about findings made in the ultimatum game, p.322-323). However, I believe that the book was easily 25-100 pages too long because of personal anecdotes (i.e., original intros, funny jokes colleagues made, etc.) that served to turn the book into a collegial "shout-out" between academics. This was surprising because of the authors complaints re:a paper that was too long (p.311).

A marvelous piece of writing, very insightful and informative. And Thaler's sense of humor is on point, I believe he was a star comedian in another life! I would recommend it in a heartbeat ♥️

In my opinion, his approach of behavioral economics makes much more logical sense as to how the world works. A very interesting and thought-provoking read.

About the author

Richard H. Thaler is the coauthor of the best-selling book Nudge with Cass R. Sunstein, and the author of Quasi Rational Economics and The Winner’s Curse. He is a professor of behavioral science and economics at the University of Chicago Booth School of Business and, in 2015, the president of the American Economic Association.