Behavioral Economics

Richard Thaler is the father of behavioral economics, a timely topic today with the uncertainty of Wall Street. Instead of traditional economic theory where markets are rational and selfish, Thaler offers that humans are bounded by rationality, selfishness, self-control, and artibrage. As humans we fear loss more than we love gain. He favors "opt out" savings programs so that we must "act" to NOT SAVE. We should also take long-term views instead of predicting short-term gains and losses in the market.