Snippets – Misbehaving

The core premise of economic theory is that people choose by optimizing.

Optimization + Equilibrium = Economics.

Your hunger on Sunday should be irrelevant in choosing the size of your meal for Tuesday.

Econs do not have passions; they are cold blooded optimizers.

Hindsight bias – Toughest problems of a CEO expecting managers take risky projects if gains are high. Managers worry for good reason, if project works out badly, manager who championed the project will be blamed whether or not the decision was a good one at that time – CEO will wrongly think whatever was the cause of the failure, it should have been anticipated in advance.

We find this bias in others not in ourselves. Heuristics causes people to make predictable errors

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