Richard Thaler Quotes

I love Richard Thaler's 'Quasi Rational Economics.' A collection of some of his most interesting and inventive essays, the real foundation of behavioral economics.

I started in business journalism from the outside, so when I started writing about markets and business, I was struck by the fact that markets seemed to work well even though people are often irrational, lack good information and are not perfect in the way they think about decisions.

It is true that from a behavioral economics perspective we are fallible, easily confused, not that smart, and often irrational. We are more like Homer Simpson than Superman. So from this perspective it is rather depressing. But at the same time there is also a silver lining. There are free lunches!

We historians are increasingly using experimental psychology to understand the way we act. It is becoming very clear that our ability to evaluate risk is hedged by all sorts of cognitive biases. It's a miracle that we get anything right.

There is much evidence that people are not rational, in the economist’s sense; nor do they take into account expectation, in the precise interpretation of that word. As a result, economic theory often does not correspond with what happens in the market. Some would argue that we need descriptive economics. I would argue that all should be taught about probability, utility, and MEU (maximization of expected utility) and act accordingly.

I practice what has come to be called behavioral economics.

The lesson of my field, behavioral economics, is that we need to understand the ways in which we differ from the rational human assumed in standard economic theory.

The concept of loss aversion is certainly the most significant contribution of psychology to behavioral economics.

The great thing about behavioural psychology and economics is that they help us to see that there are actually pretty good reasons why human beings swing from greed to fear, and why we're not really calculating machines or utility-maximisers.

Economists think about what people ought to do. Psychologists watch what they actually do.

If you simply announce that things are irrational, then that alone doesn't get you very far. You have to replace rational agents with some concrete notion of what it means to be irrational.

To say that man is a reasoning animal is a very different thing than to say that most of man's decisions are based on his rational process. That I don't believe at all.

Even the most analytical thinkers are predictably irrational; the really smart ones acknowledge and address their irrationalities.

Policy makers, like most people, normally feel that they already know all the psychology and all the sociology they are likely to need for their decisions. I don't think they are right, but that's the way it is.

My research career has been devoted to understanding human decision-making and problem-solving processes. The pursuit of this goal has led me into the fields of political science, economics, cognitive psychology, computer science and philosophy of science, among others.

I like to think that since I was about 19, I have studied human decision-making and problem-solving.

In psychology and behavioral economics, people have shown that if you just describe options in a certain way, or make some features of a situation salient, you can get people to do and even see what you want. You don't have to be a Jedi to manipulate people's attention.

That's the world we live in: when it comes to economics, people have emotions; it's not like chemistry or physics.

Early in my doctoral training at Cornell University, I became immersed in the behavioral decision theory paradigm.

Humans are hard-wired to be irrational when it comes to financial decisions. We must understand that so we don't become the sucker at the poker table.

[There will be movement toward] behavioral economics... [which] involves study of those aspects of men's images, or cognitive and affective structures that are more relevant to economic decisions.

Who should know better than a cosmetician that human beings are less than rational creatures?

A growing body of psychology research shows that incompetence deprives people of the ability to recognize their own incompetence. To put it bluntly, dumb people are too dumb to know it…. Along the same lines, people who aren't talented in a given area tend not to be able to recognize the talents or good ideas of others, from co-workers to politicians. This may impede the democratic process, which relies on citizens having the capacity to identify and support the best candidate or policy.

When a man is a prey to his emotions, he is not his own master, but lies at the mercy of fortune: so much so, that he is often compelled, while seeing that which is better for him, to follow that which is worse.

It's human nature to make the complex manageable and determine things that fit your conclusions. That's bias.