Chapter from: "Free Market Madness: Why Human Nature Is at Odds With Economics - and Why It Matters"
Published by:
Harvard Business Publishing
Length: 20 pages
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Abstract
The theory that human beings act rationally and in their own best interest has dominated economics since the publication of Adam Smith's influential book, Wealth of Nations. More recently, however, research in psychology and economics has uncovered evidence that the opposite is true: people do not always make rational choices. This chapter looks at examples of irrational consumer behavior as it details the quest of some economists to show how irrational forces can influence market transactions - a foundational principle of the relatively nascent field of behavioral economics. This chapter is excerpted from ‘Free Market Madness: Why Human Nature Is at Odds With Economics - and Why It Matters'.
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Abstract
The theory that human beings act rationally and in their own best interest has dominated economics since the publication of Adam Smith's influential book, Wealth of Nations. More recently, however, research in psychology and economics has uncovered evidence that the opposite is true: people do not always make rational choices. This chapter looks at examples of irrational consumer behavior as it details the quest of some economists to show how irrational forces can influence market transactions - a foundational principle of the relatively nascent field of behavioral economics. This chapter is excerpted from ‘Free Market Madness: Why Human Nature Is at Odds With Economics - and Why It Matters'.