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Tag: Misbehaving

Carsten Rehder/picture-alliance/dpa/AP Images

Humans Misbehave, Economists Misunderstand, Governments Overreact

Since humans don’t behave the way models say we should, those economic models make a lot of bad predictions. “Virtually no economists saw the financial crisis of 2007-08 coming,” he admits (although another behavioral economist, Robert Shiller, did warn about soaring housing prices). “Worse, many thought that both the crash and its aftermath were things that simply could not happen.” The answer is to empower people through free markets.