Behavioural economics: The irrationality of politics | The Economist

The financial crash was the result of human irrationality: our misperception of risk, our tendency to favour evidence that confirms our existing biases, our hard-wired desire to go with the crowd. The authors warn that the crash will happen again unless governments find ways of compensating for these foibles through policy.

via Behavioural economics: The irrationality of politics | The Economist.

A typical statement these days. But BE as we know it now only provides necessary but not sufficient condition for crisis prevention. Merely indicating the existence of the biases is not enough. It needs to connect dots behind.

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