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I am a sucker for non-market economics: application of the economic principle outside narrowly defined market situations (then again, for an economist, there is hardly anything that is not a market situation, but that is a matter of definition). I worked quite a bit on public choice and institutional economics at university, and have maintained the belief that studying human behavior by way of cross-fertilisation of economics, psychology, sociology, biology and whatever comes in handy helps explain a lot about how decision-making happens, past present and (most importantly for an economist) future.

In this spirit, I see with quite a bit of satisfaction the demise of the traditional form of neoclassical economics, using rather simplistic models of human behavior, and I enjoy the success of rogue economists’ publications in the “Freakonomics” spirit. These heirs to Gary Becker do not only explain a lot of things traditional economists cannot explain or understand, they are usually also much more fun to read.

A recent example from my reading list: “Predictably Irrational: The Hidden Forces that shape our Decisions by Dan Ariely”. Easy to read, easy to grab, often profound in the way it shows essential determinants of human behavior. Ariely describes experiments he and his colleagues conducted, and these experiments are mostly highly interesting ways of showing the side conditions of human decision-making. I believe when you put some work into applying these findings and transfer them to any given policy, market or private life situation, there is a good chance that you have a profoundly higher probability of getting what you want. Findings on what makes people cheat in exams, or steal, etc. He shows how simple the wiring often is that creates decisions in the midst of complex information. (Sometimes the wiring is embarrassingly direct: as a man, it is not very nice to read the findings of the experiment assessing the ability of sexually aroused males to anticipate their mating behavior).

There are interesting chapters about the interplay between social rules and market rules (try telling your date how much the meal you just paid her cost and see how your expected revenue declines). How much easier is it to cheat when no cash is involved! Includes funny yet clever suggestions about credit card improvement schemes: e.g. credit card calls your husband each timer you buy shoes, or your wife each time you buy chocolate beyond your monthly chocolate limit.

An enlightening and entertaining overview of experiments conducted in the area of behavioural economics, exactly my piece of cake!


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