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Archive for February, 2016

Phallacies of the Phree Market

Why does the phenomenon of ‘phishing’ — getting others to act against their self-interest, instead exploiting them (or their gullibility) to further one’s own agenda — emerge with such high degree of reliability wherever ‘free markets’ reign? In their book ‘Phishing for Phools’, economists George Akerlof and Robert Shiller argue that phishing strikes at the very heart of economics, by calling into question our capacity to rational decision-making and thereby undermining the very idea of ‘homo oeconomicus’. What explains phishing, Akerlof and Shiller suggest is a fundamental mechanism that connects psychological and informational malfunctions in modern economics: namely, the human tendency to engage in, and fall for, storytelling. Drawing on a wide range of examples — from the economics of slot machines, to health clubs, lobbying, junk bonds and finanical crises — this astonishingly witty book offers insight and diversion for economists and laypersons alike. However, as BRB reviewer Gabor Istvan Biro concludes, new trends in economics such as evolutionary economics and economic anthropology — neither of which is discussed in ‘Phishing for Phools’ — hold out the promise of making sense of phishing in a potentially more rigorous and unified way.