No, Emotional Economics isn’t the state of our sad economy. It’s one more bullet hole in the old dog-that-won’t-die theory of “rational choice” in the social sciences.
Mathematical and Evolutionary game theorists have nearly done away with the idea of the rational actor: Is a single-celled organism rational? No. But, it makes decisions that affect its evolutionary fitness level.
So do we.
And rarely do we make those decisions with full cognitive force.
Investors, he said, frequently take decisions contrary to “pure” economic judgment because they hate to admit they made mistakes in the past and because they may even be “wired” with a risk-taking gene that confounds objectivity.
Ooh, now that’s what I’m talkin’ about.