Summary of Phishing for Phools

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Aside from the alarming claims that economists George A. Akerlof and Robert J. Shiller make about the drug approval process in the United States, the scams and lures they describe won’t surprise you. They argue that traditional and behavioral economists overlook or severely downplay the impact that manipulators, swindlers, con artists and outright liars have in the free market economy. These “phishers” distort markets and affect your decisions as a consumer, voter, patient and investor. Akerlof and Shiller describe an entirely new paradigm for economics that might help you see the next big scam – so you can avoid or even profit from it. But they offer something more useful than horror stories: an overlooked but important factor to consider in economic theory. Though they may underestimate the thoughtfulness of the average American, when Nobel Prize-winning economists propose a new idea, you pay attention. getAbstract recommends their analysis to economists, psychologists and all those interested in protecting themselves from scams.

About the Authors

George A. Akerlof is a professor of public policy at Georgetown University. Robert J. Shiller is an economics professor at Yale University. Both are Nobel laureates in economics.



Everybody Plays the “Phool”

Exaggerations, tricks and outright lies surround and confuse you. Hucksters – or “phishers” – attack your gullible nature, making you a phool. For psychological and emotional reasons – and sometimes because you lack information – you buy what you don’t need, even when you know it might hurt you.

Though conventional economics posits that people make only rational decisions in their own best interests, you and everyone else will make illogical choices that are detrimental to your health and finances. Knowing this, modern economists have formed the relatively new field of behavioral economics. It combines the logic of traditional economics with the impact of “psychological biases” to offer a more complete explanation of why you make the decisions you do. Yet behavioral economics misses a critical part of the equation: Phishers operate everywhere all the time, and they play a significant role in your decisions and behaviors in free markets. Traditional and behavioral economics fail to account for the way these scam artists distort markets.

Human Nature

Most people give into temptation easily, so opportunists supply them with all...

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