NOVEL SOLUTIONS
Fun With Economics?
NICHOLAS LEIDER, ASSOCIATE EDITOR I
t’s no secret that human beings can be and often are irrational. (This point is especially evident if you’ve ever dealt with a customer who needed a few thousand castings yesterday.) But, for some strange reason, economics has been slow to accept this otherwise obvious truth. In this most applicable of the social sciences, humans were thought of as rational, reasoned and logical. “Misbehaving: The Making of Behavioral Eco-
nomics” by Richard H. Thaler is the story of one man’s crusade to change this fundamental assump- tion. The very term “behavioral economics” tells you that this book is dealing more with the human mind than the invisible hand. Told in chronological order, from Thaler’s early
work as a graduate student to a quick peek at what’s next, “Misbehaving” is simultaneously technically dense and easy to read. This is not to say you’ll be cracking this open while lounging by the pool. Rather, information is packaged and delivered in a way that’s easily consumed by relative novices. If you’re looking for step-by-step instructions to better the bottom line, this isn’t your blueprint. But “Misbehaving” delivers more than a few eye-open- ing lessons for the business owner or manager. In the chapter on game shows—what better illustra- tions for people’s tendency for mental hiccups?— Thaler puts a few contestants from “Deal or No Deal” under the microscope. For example, one unfortunate man was left with
five possibilities: four relatively low payoffs and the highest payday possible. As it became evident he was nearing an all-or-almost-nothing proposi- tion, he appeared ardent on going for it all—and he didn’t make it. Would you believe how the game progresses affects a contestant’s probability of accepting a particular offer? Of course it does, which is why it is an effective indictment of why economists have banked on the rationality of the individual for decades. Beyond lessons for yourself and your busi-
ness, “Misbehaving” is simply an interesting read in terms of psychology. Whether specific points change how you view yourself and your workforce, the book veers away from esoteric concepts and theories. The research is evident and the discussion is grounded in everyday examples or easily under- stood hypotheticals.
ABRIDGED
Relevance to Metalcasters Technical Diffi culty Self-Help Fluff Profi t Booster
Businesses are realizing that a deeper understanding of human behavior is every bit as important to running a successful business as is an understanding of fi nancial statements and operations management. After all, humans run companies, and their employees and
customers are also humans.
Metalcasters’ Translation: T e intersection of human psychology and economics
is an interesting place where people and profi ts appear to randomly swirl about. For metalcasters to better understand both customers and coworkers, it will be with knowing the fact that misbehavior is a rule of human nature.
July 2015 MODERN CASTING | 49
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