If we can learn to embrace the Homer Simpson within us, with all our flaws and inabilities, and take these into account when we design our schools, health plans, stock markets, and everything else in our environment, I am certain that we can create a much better world. This is the real promise of behavioral economics.

People think about life in terms of changes, not levels. They can be changes from the status quo or changes from what was expected, but whatever form they take, it is changes that make us happy or miserable.

On traditional economic theory:We do not play chess as if we were a grandmaster, invest as if we were Warren Buffett, or cook like an Iron Chef. It is more likely we cook like Warren Buffett, who loves to eat at Dairy Queen.

The model of the utility of wealth gets the basic psychology of wealth right but to create a better descriptive model they recognize that we had to change our focus from levels of wealth to changes in wealth this may sound like a subtle tweak but switching the focus to changes as opposed to levels is a radical move. The focus on changes because changes or the way humans experience life.

Behavioral engineering in all of its manifestations always degenerates into merciless manipulation. It reduces all (manipulators and manipulated alike) to a deadly "mass effect." The central assumption, that manipulation of individual personalities can achieve uniform behavioral responses, has been exposed as a lie by many species but never with more telling effect than by the Gowachin on Dosadi.— The Dosadi Papers, BuSab reference

Experienced radiologists who evaluate chest X-rays as “normal” or “abnormal” contradict themselves 20% of the time when they see the same picture on separate occasions

Experienced radiologists who evaluate chest X-rays as “normal” or “abnormal” contradict themselves 20% of the time when they see the same picture on separate occasions.

... confidence, fairness, corruption, money illusion, and stories. These are real motivations for real people. They are ubiquitous. The presumption of mainstream macroeconomics that they have no important role strikes us as absurd.

But if it is crazy to turn down the 100 bets, the logic of Samuelson's argument is just reversed; you should not turn down one! Shlomo and I called this phenomenon "myopic loss aversion". The only way you can ever take 100 attractive bets is by first taking the first one, and it is only thinking about the bet in isolation that fools you into turning it down.

Wouldn't economics make a lot more sense if it were based on how people actually behave, instead of how they should behave?