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This is a peeve of mine: It's not "behavioral economics". It's social and organizational psychology. Virtually all the research has been done by psychologists. For example, Daniel Kahneman, Economics Nobel Laureate, is a Psychologist.

"Smart" people and the media have been obsessed with "rationality", (pseudo-)math and quantitative research, until it finally emerged in the economistic world view that people are - surprise, surprise - not that rational; something that psychologists have known for ages.

Right now, economics is sort assimilating a lot of psychological insights, which is good for humanity, but it's not economics, the original creativity stems from psychology.



you're working off the strawman version of rationality. people are are perfectly rational...from the perspective of small hunter gatherer tribes inconstant conflict for status and resources.


The "rationality" that a lot of traditional (micro-)economic arguments are based on is the one defined by rational choice theory (http://en.wikipedia.org/wiki/Rational_choice_theory). While economics may be moving on, many journalists, business people, politicians, etc. have not yet gotten the memo, and operate based on very flawed assumptions.

I thus thus didn't use a straw man, but rather the operational definition of rationality traditionally employed by mainstream lines of economics.

You're onto something with your definition in that a lot of friction and inefficiency today originates from people not coping well with an environment that is fast-changing and very different from our environment of evolutionary adaptiveness.


I totally agree with you.

We were evolved to be rational, but only in the environment that we evolved from. The environment we have now is far from small hunter-gatherer tribes, yet we are still equipped with the same rationale mechanisms. Hence, it's not working out perfectly.

Maybe if we restructure our society to simulate what it once was or at least some parts of it, we can better utilize our rationale mechanisms.


I shouldn't say we evolved to be perfectly rational of course. it's more that we evolved to approximate rationality in a manner more efficient than actually calculating everything. see "how outfielders catch fly balls" as an example of a rationality shortcut.




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