Behavioral Economics: The Errors Point the Same Way
If people departed randomly from rational choice, the departures would cancel out. They lean consistently in the same directions — which is what makes them worth studying, and worth worrying about.
If people departed randomly from rational choice, the departures would cancel out. They lean consistently in the same directions — which is what makes them worth studying, and worth worrying about.
Most attention goes to choosing investments — the part you control least and that matters least. Saving rate, time, and costs decide the outcome, and all three are dull.
A fair coin flip for equal stakes feels like a bad bet to almost everyone. The asymmetry behind that instinct quietly governs pricing, negotiation, investing, and why reform is so hard.
A company posts record profits and the share price falls. That stops looking irrational once you see that a price already contains what everyone expected — and moves only on the difference.