FinanceProfessor.com blog entry on the article “Economics Wins, Psychology Loses, and Society Pays” by Max Bazerman, Deepak Malhotra. In this article, the authors identify “five predominant myths, adapted from pervasive economic assumptions, which serve as guiding policy principles and serve to destroy value in society. These myths include:
1) Individuals have stable and consistent preferences
2) Individuals know their preferences and they pursue known preferences with volition
3) Individuals make decisions based on all of the evidence available to them
4) Free markets solve economic problems
5) Credible empirical evidence consists of outcome data, not of mechanism data”
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