Tag: Book Recommendations

Five Book recommendations from Dan Ariely on Behavioural Economics

Dan Ariely, professor of psychology and behavorial economics, says we can all be more aware of our surroundings and our decision-making process. He suggests the following five books:

The Invisible Gorilla

We think we see with our eyes, but the reality is that we largely see with our brains. Our brain is a master at giving us what we expect to see. It’s all about expectation, and when things violate expectation we are just unaware of them. We go around the world with a sense that we pay attention to lots of things. The reality is that we notice much less than we think. And if we notice so much less than we think, what does that mean about our ability to figure out things around us, to learn and improve? It means we have a serious problem. I think this book has done a tremendous job in showing how even in vision, which is such a good system in general, we are poorly tooled to make good decisions.

Mindless Eating

This is one of my favourite books. He takes many of these findings about decision-making and shows how they work in the domain of food. Food is tangible, so it helps us understand the principles.

The Person and the Situation

This is an oldie but a goodie. It’s a book that shows how when we make decisions, we think personality plays a big role. “I’m the kind of person who does this, or I’m the kind of person who does that.” The reality is that the environment in which we make decisions determines a lot of what we do. Mindless Eating is also about that – how the food environment affects us. Nudge is also about that – how we can actually design the environment or external influences to make better decisions. But The Person and the Situation was the first book to articulate how we think we are making decisions, when the reality is that the environment around us has a lot to do with it.


The Cialdini book is very important because it covers a range of ways in which we end up doing things, and how we don’t understand why we’re doing them. It also shows you how much other people have control, at the end of the day, over our actions. Both of these elements are crucial. The book is becoming even more important these days.


One of the reasons Nudge is so important is because it’s taking these ideas and applying them to the policy domain. Here are the mistakes we make. Here are the ways marketers are trying to influence us. Here’s the way we might be able to fight back. If policymakers understood these principles, what could they do? The other important thing about the book is that it describes, in detail, small interventions. It’s basically a book about cheap persuasion.

Dan Ariely is the best-selling author of The Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home and Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions.

Greg Mankiw Recommends Reading These 18 Economics Books

If you’d like to read more about economics issues try these 18 books recommended by Greg Mankiw, author of Principles of Economics.

The Cartoon Introduction to Economics

Basic economic principles, with humor.

Spin-Free Economics

A straightforward guide to major economic policy debates.

Lives of the Laureates

Twenty-three winners of the Nobel Prize in Economics offer autobiographical essays about their life and work.

The Myth of the Rational Voter: Why Democracies Choose Bad Politics

An economist asks why elected leaders often fail to follow the policies that economists recommend.

The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It

A former research director at the World Bank offers his insights into how to help the world’s poor.

Thinking Strategically: The Competitive Edge in Business, Politics, and Everyday Life

This introduction to game theory discusses how all people—from corporate executives to criminals under arrest—should and do make strategic decisions.

The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics

A former World Bank economist examines that many attempts to help the world’s poorest nations and why these attempts have so often failed.

Capitalism and Freedom

In this classic book, one of the most important economists of the 20th century argues that society should rely less on the government and more on the free market.

The Worldly Philosophers

A classic introduction to the lives, times, and ideas of the great economic thinkers, including Adam Smith, David Ricardo, and John Maynard Keynes.

Peddling Prosperity

A survey of the evolution of economic ideas and policy, with an emphasis on macroeconomics and international trade.

The Armchair Economist: Economics and Everyday Life

Why does popcorn cost so much at the movie theaters? Steven Landsburg discusses this and other puzzles of economic life.

Freakonomics: A Rogue Economics Explores the Hidden Side of Everything

Economic principles and clever data analysis applied to a wide range of offbeat topics, including drug dealing, online dating, and sumo wrestling.

The Big Short: Inside the Doomsday Machine

How a few savvy investors managed to make money during the financial crisis of 2008 and 2009.

A Random Walk Down Wall Street

This introduction to stocks, bonds, and financial economics is not a “get rich quick” book, but it might help you get rich slowly.

Reinventing the Bazaar: A Natural History of Markets

A deep and nuanced, yet still very readable, analysis of how society can make the best use of market mechanisms.

Eat the Rich: A Treatise on Economics

A humorist asks why some nations prosper while others don’t. He answers with a world tour that takes the reader from Albania to the New York Stock Exchange.

Nudge: Improving Decisions about Health, Wealth, and Happiness

Behavioral economics can help people, as well as companies and governments, make better decisions.

In Fed We Trust

A journalist recounts how the Federal Reserve dealt with the financial crisis of 2008 and 2009.

If you’re a total neophyte, like me, the best place to start is actually Greg’s textbook. That is where this list came from.

The Bookshelf talks with Vaclav Smil

The bookshelf talks with Vaclav Smil about what he’s reading.

Could you tell us a bit about yourself?

I am an incorrigible interdisciplinarian. I was trained in a broad range of basic natural sciences (biology, chemistry, geography, geology), and then branched into energy engineering, population and economic studies and history. For the past 30 years my main effort has gone into writing books that offer new, interdisciplinary perspectives on inherently complex, messy realities. I wrote the first comprehensive books on China’s energy and on China’s environment, and I have also written a number of wide-ranging analyses of global energy, books on global ecology, food production and most recently on the technical foundations of modern civilization (more on all of them on my Web site). Right now I am writing my 24th book, Global Catastrophes and Trends: The Next 50 Years, a sweeping look at sudden events (ranging from volcanic mega-eruptions to viral pandemics) as well as some mercilessly unfolding trends (population aging, great economic power shift, global warming).

What books are you currently reading (or have you just finished reading) for your work or for pleasure? Why did you choose them, and what do you think of them?

Very easy to answer: I have kept the list of books I read (in order to be able to dip into some of them again without tormenting my memory or blindly searching) ever since we came from Europe to the United States in 1969. The list contains only novels, poetry, biographies, history, linguistics and arts books, not science books I read for my work. Here are the books I read between early July and late September. I tend to read in bunches: When I discover a new author or a new topic, I tend to do a systematic sweep of other available writings, and so the summer of 2006 was taken mostly by the first biographies of Mozart (both third or fourth rereads from my collection of Mozartiana) and by Jonathan Coe (a new discovery for me) and Naguib Mahfouz

Right now I am in the middle of Orhan Pamuk’s Istanbul (Knopf, 2005).

What book recommendations do you have for young readers?
Be eclectic: try many authors, topics, fields and epochs. This is the only way to discover books that you will remember. And do it on your own: take recommendations of others as mere suggestions.

What science book recommendations do you have for nonscientists?
Stay away from highly touted bestsellers that claim to make you understand matters such as black holes or DNA sequencing: they will not. Stay away from books that appear in fashion-chasing clusters: excellent recent examples are books on nano-everything, on hydrogen economy and on global warming. Simply explore, go on book Web sites, search and buy: Paperbacks are cheap, and if you do not like them after the first few pages, give them away or just recycle the paper.

Behavioral Economics Reading List

Are you looking for good books to read on Behavioral Economics or Behavioral Psychology? This is a list of my best Behavioral Economics books of all time. If you only want to read a few, check out the first three which will give you a firm introduction to everything you need to know.

Judgement in Managerial Decision Making (awesome)
When faced with a decision, we all believe we’re weighing the facts objectively and making rational, thoughtful decisions. In fact, science tells us that in situations requiring careful judgment, every individual is influenced by his or her own biases to some extent. Drawing on the very latest behavioral decision research this book examines judgment in a variety of managerial contexts and provides important insights that can help you make better managerial decisions.

Influence: The Psychology of Persuasion
Should be required Reading.

Nudge: Improving Decisions about Health, Wealth, and Happiness*
“This book is terrific. It will change the way you think, not only about the world around you and some of its bigger problems, but also about yourself.” -Michael Lewis

Why Smart People Make Big Money Mistakes
Gary Belsky and Thomas Gilovich reveal the psychological forces — the patterns of thinking and decision making — behind seemingly irrational behavior. They explain why so many otherwise savvy people make foolish financial choices: why investors are too quick to sell winning stocks and too slow to sell losing shares, why home sellers leave money on the table and home buyers don’t get the biggest bang for their buck, why borrowers pay too much credit card interest and savers can’t sock away as much as they’d like, and why so many of us can’t control our spending.

Breakdown of Will
Ainslie argues that our responses to the threat of our own inconsistency determine the basic fabric of human culture. He suggests that individuals are more like populations of bargaining agents than like the hierarchical command structures envisaged by cognitive psychologists.

Think Twice: Harnessing the Power of Counterintuition
In Think Twice, Michael Mauboussin shows you how to recognize-and avoid-common mental missteps, including: Misunderstanding cause-and-effect linkages; Aggregating micro-level behavior to predict macro-level behavior; Not considering enough alternative possibilities in making a decision; Relying too much on experts

Identity Economics: How Our Identities Shape Our Work, Wages, and Well-Being
Monetary incentives are counter-productive in team environments that succeed in creating a culture of identity that fosters teamwork, where mission understanding and commitment are core to performance.

Animal Spirits: How Human Psychology Drives the Economy, and Why it Matters for Global Capitalism*
Akerlof and Shiller reassert the necessity of an active government role in economic policymaking by recovering the idea of animal spirits, a term John Maynard Keynes used to describe the gloom and despondence that led to the Great Depression and the changing psychology that accompanied recovery. Like Keynes, Akerlof and Shiller know that managing these animal spirits requires the steady hand of government–simply allowing markets to work won’t do it.

Predictably Irrational: the Hidden Forces that Shape our Decisions*
Ariely explains how expectations, emotions, social norms, and other invisible, seemingly illogical forces skew our reasoning abilities. Not only do we make astonishingly simple mistakes every day, but we make the same types of mistakes. We consistently overpay, underestimate, and procrastinate. We fail to understand the profound effects of our emotions on what we want, and we overvalue what we already own.

Rational Decisions
A concise, accessible, and expert view on Bayesian decision making.

The Irresistible Pull of Irrational Behaviour
What makes people act irrationally? This book explores the submerged mental drives that undermine rational action, from the desire to avoid loss to a failure to consider all the evidence or to perceive a person or situation beyond the initial impression and the reluctance to alter a plan that isn’t working.

Advances in Behavioral Economics
Advances in Behavioral Economics will serve as the definitive one-volume resource for those who want to familiarize themselves with the new field or keep up-to-date with the latest developments.

Behavioral GameTheory: Experiments in Strategic Interaction
Colin Camerer, one of the field’s leading figures, uses psychological principles and hundreds of experiments to develop mathematical theories of reciprocity, limited strategizing, and learning, which help predict what real people and companies do in strategic situations. Unifying a wealth of information from ongoing studies in strategic behavior, he takes the experimental science of behavioral economics a major step forward.

Behavioral Economics and its Applications
In this volume, some of the world’s leading thinkers in behavioral economics and general economic theory make the case for a much greater use of behavioral ideas in six fields where these ideas have already proved useful but have not yet been fully incorporated–public economics, development, law and economics, health, wage determination, and organizational economics.

Explaining Social Behavior: More Nuts and Bolts for the Social Sciences
Jon Elster offers an overview of key explanatory mechanisms in the social sciences, relying on hundreds of examples and drawing on a large variety of sources-psychology, behavioral economics, biology, political science, historical writings, philosophy and fiction.

Ulysses and the Sirens: Studies in Rationality and Irrationality
Elster critiques the notion of rationality in the economist’s sense, as a faculty that is concerned with maximizing the satisfaction of agents’ present preferences. He contrasts this notion of locally maximizing rationality with what can be called globally maximizing rationality. This latter concept is perhaps best illustrated by those interesting situations where the best “strategy” is irrationality.

Behavioural Finance
William Forbes lays out the fundamentals of behavioral finance.

The Psychology of Investing
Traditional finance has focused on developing the tools that investors use to optimize expected return and risk. Understanding the motivations behind this behavior is extremely important when applying these financial tools.

Beyond Greed and Fear: Understanding Behavioral Finance and the Psychology of Investing
An entertaining, yet scholarly overview of the subject.

Economics and Psychology: A Promising New Cross-Disciplinary Field
The essays in Economics and Psychology take a broad view of the interface between these two disciplines, going beyond the usual focus on “behavioral economics.” As documented in this volume, the influence of psychology on economics has been responsible for a view of human behavior that calls into question the assumption of complete rationality (and raises the possibility of altruistic acts), the acceptance of experiments as a valid method of economic research, and the idea that utility or well-being can be measured.

Irrational Exuberence*
A cult-classic at the time it was written.

An Introduction to Behaviorial Economics
…a superb introduction to the field of behavioral economics, suitable not only as an introductory text, but also as an entry-point for those desiring an engaging overview of the field.

Moral Markets : the Critical Role of Values in the Economy
This collection of essays provides an accessible guided tour of the frontier of current research in sociology, economics, biology and philosophy.

The Paradox of Choice: Why More Is Less
…we are faced with far too many choices on a daily basis, providing an illusion of a multitude of options when few honestly different ones actually exist.

More Than You Know: Finding Financial Wisdom in Unconventional Places
A must read.

The Little Book of Behavioral Investing: How not to be your own worst enemy
…will enable you to identify and eliminate behavioral traits that can hinder your investment endeavors and show you how to go about achieving superior returns in the process.

Morals and Markets: an Evolutionary Account of the Modern World
Economist and evolutionary game theorist Daniel Friedman demonstrates that our moral codes and our market systems-while often in conflict-are really devices evolved to achieve similar ends, and that society functions best when morals and markets are in balance with each other.

Heuristics and Biases: The Psychology of Intuitive Judgement
When are people’s judgments prone to bias, and what is responsible for their biases? This book compiles psychologists’ best attempts to answer these important questions.

Moral Sentiments and Material Interests: the Foundations of Cooperation in Economic Life
“This book presents social science at its interdisciplinary best: an exhilarating mix of game theory, evolutionary biology, experimental economics, cultural anthropology, grammatology, and policy analysis. It will change our views of how biology and culture together determine social behavior.” —Daniel Kahneman

The Bounds of Reason: Game Theory and the Unification of the Behavioral Sciences
Game theory alone cannot fully explain human behavior and should instead complement other key concepts championed by the behavioral disciplines. Herbert Gintis shows that just as game theory without broader social theory is merely technical bravado, so social theory without game theory is a handicapped enterprise.

The Methodology of Experimental Economics
This book provides the first comprehensive analysis and critical discussion of the methodology of experimental economics, written by a philosopher of science with expertise in the field.

The Handbook of Experimental Economics
…presents a comprehensive critical survey of the results and methods of laboratory experiments in economics.

Thinking and Deciding
has established itself as the required text and important reference work for students and scholars of human cognition and rationality.

Judgement Under Uncertainty: Heuristics and Biases
This volume is an important collection of papers, with relevance to anyone working in fields where decision-making is at the core. This is THE book.

Choices, Values, and Frames
…presents an empirical and theoretical challenge to classical utility theory, offering prospect theory as an alternative framework. Extensions and applications to diverse economic phenomena and to studies of consumer behavior are discussed. The book also elaborates on framing effects and other demonstrations that preferences are constructed in context, and it develops new approaches to the standard view of choice-based utility.

The Construction of Preference
When asked to make a decision, people often don’t really know what they want; they must construct their preferences ‘on the spot’. This book describes the concept of preference construction, tracing the blossoming of this idea within psychology, economics, marketing, law, and environmental policy.

Behavioural Finance: Insights into Irrational Minds and Markets
A good introduction.

Value Investing: Tools and Techniques for Intelligent Investment
why everything you learnt at business school is wrong

A Short History of Financial Euphoria
In this small but witty and well-crafted book, Galbraith chronicles the major speculative episodes, from the seventeenth-century tulipmania to the junk-bond follies of the eighties.

Manias, Panics, and Crashes
…an engaging and entertaining account of the way that mismanagement of money and credit has led to financial explosions over the centuries. Covering such topics as the history and anatomy of crises, speculative manias, and the lender of last resort, this book puts the turbulence of the financial world in perspective.

Devil Take the Hindmost: A History of Financial Speculation
A must read.

Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism
Akerlof and Shiller reassert the necessity of an active government role in economic policymaking by recovering the idea of animal spirits, a term John Maynard Keynes used to describe the gloom and despondence that led to the Great Depression and the changing psychology that accompanied recovery. Like Keynes, Akerlof and Shiller know that managing these animal spirits requires the steady hand of government–simply allowing markets to work won’t do it. In rebuilding the case for a more robust, behaviorally informed Keynesianism, they detail the most pervasive effects of animal spirits in contemporary economic life–such as confidence, fear, bad faith, corruption, a concern for fairness, and the stories we tell ourselves about our economic fortunes–and show how Reaganomics, Thatcherism, and the rational expectations revolution failed to account for them.

Discover Your Inner Economist
An engaging narrator, Cowen offers idiosyncratic strategies for appreciating museum art, for building family trust and cooperation, for writing a personal ad, for reading classic novels that seem boring on first inspection, for surviving torture, for properly practicing self-deception and for most effectively giving to beggars in Calcutta.

Additions to the list in 2011

Thinking, Fast and Slow
Kahneman takes us on a groundbreaking tour of the mind and explains the two systems that drive the way we think. System 1 is fast, intuitive, and emotional; System 2 is slower, more deliberative, and more logical. Kahneman exposes the extraordinary capabilities—and also the faults and biases—of fast thinking, and reveals the pervasive influence of intuitive impressions on our thoughts and behavior. The impact of loss aversion and overconfidence on corporate strategies, the difficulties of predicting what will make us happy in the future, the challenges of properly framing risks at work and at home, the profound effect of cognitive biases on everything from playing the stock market to planning the next vacation—each of these can be understood only by knowing how the two systems work together to shape our judgments and decisions.

Everything Is Obvious: *Once You Know the Answer
“Every once in a while, a book comes along that forces us to re-examine what we know and how we know it. This is one of those books. And while it is not always pleasurable to realize the many ways in which we are wrong, it is useful to figure out the cases where our intuitions fail us.”—Dan Ariely

Priceless: The Myth of Fair Value (and How to Take Advantage of It)
Poundstone dives into the latest psychological findings to investigate how and why prices are allocated.

Strangers to Ourselves: Discovering the Adaptive Unconscious
Wilson attempts to explain why there’s so much about ourselves that we fail to understand, which can lead to misdirected anger.

Born Liars: Why We Can’t Live Without Deceit
“… a lively, engaging read that also makes a bold argument about the role of lying in our lives”

Ulysses Unbound: Studies in Rationality, Precommitment, and Constraints
This provocative book argues that, very often, people may benefit from being constrained in their options or from being ignorant.

What Investors Really Want: Know What Drives Investor Behavior and Make Smarter Financial Decisions
“We all share behavioral traits that are major roadblocks to intelligent financial decisions. Bottom line: if you really want to achieve investment success, understand yourself and eliminate or minimize these traits. This book will help you do exactly that.”—John C. Bogle

Prospect Theory: For Risk and Ambiguity
“This masterful survey of major theories of choice and of their implications for measurement represents two decades of research and teaching by a flawless perfectionist. Wakker’s view of the field is scholarly, coherent and deeply personal.”—Daniel Kahneman

Utility of Gains and Losses: Measurement-Theoretical and Experimental Approaches
…provides a penetrating analysis of the axioms underlying human choice theory and a thorough review of the evidence. Most importantly, he illustrates the process of decomposing theories into testable properties that become the building blocks for better theories. His relentless desire to reformulate theories in response to evidence is what makes this an extraordinary book by an extraordinary scientist.