THE TWO FRIENDS WHO CHANGED HOW WE THINK ABOUT HOW WE THINK

Cass Sunstein and Richard Thaler in The New Yorker:

In 2003, we reviewed “Moneyball,” Michael Lewis’s book about Billy Beane and the Oakland A’s. The book, we noted, had become a sensation, despite focussing on what would seem to be the least exciting aspect of professional sports: upper management. Beane was a failed Major League Baseball player who went into the personnel side of the business and, by applying superior “metrics,” had remarkable success with a financial underdog. We loved the book—and pointed out that, unbeknownst to the author, it was really about behavioral economics, the combination of economics and psychology in which we shared a common interest, and which we had explored together with respect to public policy and law.

Why isn’t the market for baseball players “efficient”? What is the source of the biases that Beane was able to exploit? Some of the answers to these questions, we suggested, might be found by applying the insights of the Israeli psychologists Daniel Kahneman and Amos Tversky, on whose work behavioral economics greatly relies. Lewis read the review, began to take an interest in the whole topic of human rationality, and, improbably, decided to write a book about Kahneman and Tversky. He kindly even gave us credit for setting him down this path.

Though we were pleased that Lewis was taking an interest in our field, we admit to being skeptical when we heard about his book plan. Granted, Lewis has shown many times before—not only with “Moneyball” but also with “The Big Short,” his book about the real-estate market, and “Flash Boys,” which is about high-speed trading—that he can write a riveting book about an arcane subject. And we did not doubt the appeal of the book’s main characters: one of us had written several papers with Kahneman, and the other had known Kahneman and Tversky since 1977 and had collaborated with both men. (Tversky died in 1996, at the age of fifty-nine. Kahneman, now eighty-two, is blessedly still very much with us.) Both of us had been deeply influenced by their joint work on the psychology of judgment and decision-making. Still, how was Lewis going to turn a story about their lives into the kind of page-turner that he’s known for?

More here.