📘 "Misbehaving: The Birth of Behavioral Economics"

By Richard H. Thaler

🌟 Editor's Preface

Hi everyone! Today I'm sharing a classic work that has both shocked and thrilled the economics community: Misbehaving ! This book isn't just an academic treatise; it's a historical review of the birth and development of behavioral economics. After reading it, I was struck by how the seemingly random choices and "small irrationalities" in our daily lives actually challenge the rationality assumptions of traditional economics.

📖 Book Introduction

"Misbehaving: The Making of Behavioral Economics" (often translated into Chinese as "Misbehaving: The Birth of Behavioral Economics") was published in 2015 by Nobel laureate in economics Richard H. Thaler . Rather than being a cold academic monograph, this book is more like an autobiography of behavioral economics, guiding readers through the discipline's journey from the margins to the mainstream.

📌 The book incorporates:

• 📚Theory : Comparing the core differences between traditional economics and behavioral economics
• 😂Interesting case : Absurd but real irrational behavior in daily life
• 🧠Psychological Insights : How Humans Are Affected by Cognitive Biases
• 📈Policy Application : How to use behavioral economics to design better institutions

🧑🏫 What is "Misbehaving"?

In traditional economics, humans are assumed to be rational beings (Homo Economicus), always making choices that best serve their own interests. However, Thaler discovered that humans often act unpredictably , making seemingly irrational yet intuitive decisions.

👉 These "misbehaving" are actually our real daily life:

• I know I want to lose weight but I still can’t help eating cake🍰
• Missing out on good opportunities when investing due to fear of loss📉
• I always think free things are the best deal 🎁
• Preferring "present satisfaction" over "future benefits" ⏳

These phenomena challenge traditional economic assumptions and become the cornerstone of behavioral economics.

📚 Summary of key points in the book

1️⃣ Traditional Economics vs. Behavioral Economics

• Traditional economics: People are rational computers, pursuing utility maximization
• Behavioral Economics: People are influenced by biases, habits, and emotions and often make mistakes

2️⃣ Common “irrational” behaviors

• Loss Aversion : People feel more pain from losses than from gains.
• Anchoring Effect : Being influenced by an irrelevant number🔢
• Mental Accounting : We divide our money into different “small accounts” and spend it in completely different ways💸
• Status Quo Bias : Humans tend to maintain the status quo and are unwilling to change.

3️⃣ Application of behavioral economics

• Public policy : If the "organ donation system" is changed to the default option (opt-out), the registration rate will increase significantly🏥
• Financial markets : Explaining why investors always chase rising and falling prices 📊
• Corporate Marketing : Using Psychological Biases to Design Pricing Strategies and Promotional Plans🛒

🧑🔬 Author Background: Richard H. Thaler

• 🎓 Professor at the University of Chicago Booth School of Business
• One of the founders of behavioral economics
• 2017 Nobel Prize in Economics
• Co-authored Nudge with Cass Sunstein, a representative work of behavioral economics.

The core of Thaler's research is that humans are not rational machines but flesh and blood . This sentence sounds simple, but it completely changed the direction of economic research.

🎯 Editor's Thoughts

I find this book to be far from the difficult, traditional economics textbooks. Instead, it's filled with storytelling and fun. After reading it, you'll be tempted to rethink your own little habits:

• Why do I keep procrastinating?
• Why do I think "buy one get one free" is a better deal than a 50% discount?
• Why do I get so hung up on a small loss?

In fact, these "little irrationalities" are exactly our human nature❤️

🌈 Summary

Misbehaving is more than just an economics book; it holds a mirror up to the seemingly absurd yet real behaviors we encounter in our daily lives. From an academic perspective, it's a significant milestone in behavioral economics; from a practical perspective, it allows us to better understand ourselves and even make smarter choices.