Both books are great reads, though trying to run 180 degrees to one another along rational /rrational economic lines. But I think that there might be rational arguments for one or 2 of the things presented in Predictably Irrational, or ‘PI’!

For example, take the gift card offer on page 58, even though I chose to accept the free $10 Amazon gift card rather than pay $7 for the $20 gift card, I think that’s rational. I stand to lose nothing on the free card in case of fraud or, as has been explained in the media, in case of any of the myriad reasons that billions of dollars of gift cards go unused. I could lose $7 cash if I do not or cannot use the other card. Gift cards themselves seem like an irrational investment!

I think that one of the last examples is also telling, if ordering your choice of drink or food out loud causes us to use social norms over personal preferences, that may not be so irrational either.

Wonderful, wonderful book, fun read too!

Context determines or influences the decision making process; in the case of a home, many irrational reasons drive the decision making process, with affordability as the boundary.

In commerical transactions, the banks enforce rationality by insisting on a business plan with a range of reasonable assumptions to see how they will be paid back.

So both approaches are useful in their appropriate context.

First, I am an accountant, a CPA, and we are supposedly trained to see the world in black and white with the debits always equaling the credits. Well, I also have a degree in sociology and one in Public Administration, so I have a broader view than most in my profession.

Something hit me today while reading about “free” and social contracts. Commuting is an experiment in social contracts. One drives down the highway at 60-70 mph, feet from other vehicles (many of them huge trucks) for many miles a week. Only a tiny fraction of the time do we have accidents or collisions. Why? Because of the social contract we have with other drivers, an etiquette and code of conduct, that delineates our actions. When someone violates these rules they are risking sanction and the embarrassment of being in an accident. There is no money changing hands here, but we all know that by cooperating and being considerate and polite to other drivers we make everyone’s commute safer and quicker.

Just another example, a positive one, of how social contract can benefit society.

I think that both books are in the empirical tradition. Levitt/Dubner examine incentive based reasoning, and find clever social “experiments” which shed important light on our theorizing. Tim Harford, Tyler Cowen, and others are essentially building upon the numerous thought experiments in Schelling’s work and finding neat data to support, challenge or disconfirm some of those ideas.

I see your book, which I will bet will be less popular but more enduring than any of the above texts, is the tradition that challenged the economic notion that all reasonable behaviour is maximization of some utility function.

For example, chapter 1 is a good demonstration that the choice function property known as beta is not necessary for reasonable behaviour. The challenge for the economists, largely met in this case, is to construct a preference relation from a choice function which doesn’t satisfy beta.

The experiments in your book are less open to question than what we find in Levitt et. al. But both traditions are asking questions with empirical content, instead of just assuming a maximizing individual with a known functional form.

I think that your book is the better book because the experimental basis is sounder; but both new empirical developments are to be welcomed by everyone -even Jay Hanson.

It’s NOT MATH, it’s LOGIC (boolean algebra is not decimal arithmetic). Economists will NEVER get it because they literally don’t have the brains for it.