Misbehaving: 6 key ideas
The core ideas of Misbehaving, each in under a minute, written in our own words. Want the full depth? Get the book.
- IDEA 1 OF 6
Supposedly irrelevant factors
Standard economics says things like sunk costs or framing shouldn't matter.
In practice they change behaviour all the time.
- IDEA 2 OF 6
Mental accounting
People treat money differently depending on where it came from or what it's labelled for, even though money is interchangeable.
- IDEA 3 OF 6
The endowment effect
People demand more to give up something they own than they would pay to get it.
- IDEA 4 OF 6
Fairness matters
People will punish unfair offers even at a cost to themselves.
Pricing that feels like gouging backfires.
- IDEA 5 OF 6
Self-control problems
People know what they should do but struggle to do it.
Commitment devices help.
- IDEA 6 OF 6
Markets aren't always efficient
Investor overreaction creates mispricing that patient investors can exploit.
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