Why Smart People Make Big Money Mistakes and How to Correct Them: Lessons From the New Science of Behavioral Economics

Why Smart People Make Big Money Mistakes and How to Correct Them: Lessons From the New Science of Behavioral Economics

4.4 7
by Gary Belsky
     
 

Why do so many otherwise smart people make foolish financial choices? Why do investors sell stocks just before they skyrocket — and cling to others as they plummer? Why do shoppers overspend when using credit cards rather than cash? What do our habits of tipping or buying lottery tickets indicate about our relationship with money?

In this fascinating

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Overview

Why do so many otherwise smart people make foolish financial choices? Why do investors sell stocks just before they skyrocket — and cling to others as they plummer? Why do shoppers overspend when using credit cards rather than cash? What do our habits of tipping or buying lottery tickets indicate about our relationship with money?

In this fascinating investigation of the ways we spend, invest, save, borrow, and waste money, Gary Belsky and Thomas Gilovich reveal the psychological causes — the patterns of thinking and decision making — of irrational behavior. Most important, they focus on the decisions we make every day and, using entertaining examples, provide invaluable tips on avoiding the financial faux pas that can cost thousands of dollars each year.

Product Details

ISBN-13:
9780684859385
Publisher:
Simon & Schuster
Publication date:
04/28/2000
Edition description:
1 FIRESIDE
Pages:
224
Product dimensions:
5.60(w) x 8.40(h) x 0.60(d)

Table of Contents

CONTENTS

WHY SMART PEOPLE MAKE BIG MONEY MISTAKES

An introduction to the new science of behavioral economics.

Chapter 1: NOT ALL DOLLARS ARE CREATED EQUAL

How "mental accounting" can help you save or cost you money.

Chapter 2: WHEN SIX OF ONE ISN'T HALF A DOZEN OF THE OTHER

How "loss aversion" and the "sunk cost fallacy" lead you to throw good money after bad.

Chapter 3: THE DEVIL THAT YOU KNOW

How the "status quo bias" and the "endowment effect" make financial choices difficult.

Chapter 4: NUMBER NUMBNESS

"Money illusion," "bigness bias," and other ways that ignorance about math and probabilities can hurt you.

Chapter 5: ANCHORS AWEIGH

Why "anchoring" and "confirmation bias" lead you to make important money decisions based on unimportant information.

Chapter 6: THE EGO TRAP

"Overconfidence" and the price of thinking that you know more than you do.

Chapter 7: I HERD IT THROUGH THE GRAPEVINE

"Information cascades" and the danger of relying too much on the financial moves of others.

Conclusion: NOW WHAT?

Principles to ponder and steps to take.

Postscript: PSYCHIC INCOME

Acknowledgments

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