There are times when uncertainty is unbearable: waiting to hear about a school or job acceptance or pacing outside the operating theatre of a loved one. But other times we’re a lot happier being in the dark – or at least partially…
One of the most common justifications for hefty C.E.O. compensation packages is that if the leaders of industry are not paid well, the so-called best and brightest will no longer flock to fill the corporate ranks, and will instead go elsewhere. High…
I just received this letter from a friend in the banking industry. He prefers to remain anonymous (you’ll see why soon enough). Dear Mark, There’s been a lot of ballyhoo recently about your IPO and your choice of investment bankers. Indeed, a…
Reflecting back on our recent economic history bring to my mind a two sad surprises. Even as a behavioral economist who generally believes in the prevalence of irrationality in our every day life, I place some stock in the main mechanism that…
Before the financial crisis of 2008, it was rather difficult to convince people that we all might have irrational tendencies. For example, after I gave a presentation at a conference, a fellow I’ll call Mr. Logic (a composite of many people I…
Paul Krugman published an op-ed yesterday about exec salaries. The very sad conclusion he comes to is that because the financial markets seem to be on an improving trajectory (although it is hard to know if this reflects a real improvements in…
Adam Smith first coined the term “The Invisible Hand” in his important book “The Wealth of Nations.” With this term he was trying to capture the idea that the marketplace would be self-regulating. The basic principle of the invisible hand is that…
Sometimes asking someone to do something for nothing is more powerful than paying them. In a research paper entitled “Effort for Payment: A Tale of Two Markets,” James Heyman and I that people are willing to help move a couch or perform…
The first chapter of the Bernie Madoff fiasco has come to a close, with Madoff pleading guilty to 11 charges of fraud yesterday. Madoff’s massive Ponzi scheme was horrific on many levels. But while we watch the next phase of the scandal,…
In case you live in NY and have nothing to do on 3/16 at 6-8 PM I am going to give a short talk on the stock market from the perspective of behavioral economics — on the floor of the NY Stock…
