How We Decide
Behavioral economics is demonstrating that humans don’t always act in self-interested ways, and that transactions themselves have an emotional component.
Clay Shirky • Cognitive Surplus: How Technology Makes Consumers into Collaborators
Early experiences with defined-contribution savings plans revealed that Humans could use some help on three fronts: enrolling in the plans, increasing their contribution rates, and improving their investment returns.
Cass R. Sunstein • Nudge: The Final Edition
Understanding mental accounts would also improve public policy. Governments can benefit from understanding the concept of mental accounting.
Cass R. Sunstein • Nudge: The Final Edition
By far the best theory for describing the principles of our irrational decisions is something called Prospect Theory. Created in 1979 by the psychologists Daniel Kahneman and Amos Tversky, prospect theory describes how people choose between options that involve risk, like in a negotiation. The theory argues that people are drawn to sure things over
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