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Book Review: Thinking, Fast and Slow by Daniel Kahneman

A Nobel laureate’s new book cautions us not to trust our gut

Thinking, Fast and Slow
By Daniel Kahneman
Farrar, Straus and Giroux; 499 pp; $30

 

For the last decade or so a band of scholars has been trying to cast off the long-accepted “rational agent” theory of economic behavior—the one that says that people, in their economic lives, behave like calculating robots, making rational decisions when they buy a stock, take out a mortgage, or go to the track. These scholars have offered a trove of evidence that people, far from being the rational agents of textbook lore, are often inconsistent, emotional, and biased. Perhaps tellingly, the pioneers of this field were not economists. Daniel Kahneman and Amos Tversky were Israeli psychologists who noticed that real people often do not make decisions as economists say they do. Tversky died in 1996; six years later, Kahneman won the Nobel Prize for economics.