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Classical economic theory can't explain the premium equity puzzle. After all,…

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Source: Carlo Cipolla, The Basic Law of Human Stupidity

For example, when Thaler asked people whether they would drive twenty minutes out of their way to save five dollars on a fifteen-dollar calculator, 68 percent of respondents said yes. However, when he asked people whether they would drive twenty minutes out of their way to save five dollars on a $125 leather jacket, only 29 percent said they would.

Right after soaps became available in an area, the number of births would drop sharply; moreover, women who had children in those areas named their children after the main characters in the soap.31

The flood of effective altruists into the firm was worrisome. These people arrived with their own value system. They had their own deep loyalties to something other than Jane Street. They didn’t have the usual Wall Street person’s relationship to money; they didn’t care about their bonuses in the ways Wall Street people were supposed to care. Sam B

The appeal of libertarian paternalism has been recognized in many countries, including the UK and South Korea, and by politicians of many stripes, including Tories and the Democratic administration of President Obama. Indeed, Britain’s government has created a new small unit whose mission is to apply the principles of behavioral science to help the

We think it is a vicious interplay of three factors, each as unfortunate as the last, each feeding and fed by the others. First: physics envy. This is well understood and is not an original insight. Second, a more specific, material effect of physics envy in this realm: It pushes academic economists to search for what can be measured and quantified

These tactics can markedly increase the success of a new product launch. Based on behavioral economic theories we've tested in many different customer settings, these six tactics become more powerful when you combine them. Here they are, along with examples that illustrate them: Compromise effect: Make decisions easier for people who can't choose.