"What are we to conclude from all this? The most obvious lesson is simply that human psychology is infernally complicated. The standard assumptions that economists have been known to make about human rationality and the way that people respond to incentives represent a gross oversimplification. Sometimes this simplified model produces incredibly powerful, highly generalizable results. But sometimes it generates predictions that are totally off base. Increasingly, economists are becoming aware of this—there has been a significant move toward so-called behavioral economics within the profession. This approach, as the name suggests, pays a lot more attention to how people actually behave. Unfortunately, behavioral economists have yet to generate anything with the explanatory and predictive power of “the model” that is taught in Economics 101, and so the latter continues to exercise its intoxicating (and sometimes toxic) influence on the minds of the young."
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Chap. 2 : Incentives Matter: … except when they don’t
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Joseph Heath
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