A thoughtful examination of the mechanics of our one-click world.
How economic theories power our market-driven lives.
Fisman (Chair, Behavioral Economics/Boston Univ.) and Harvard Business Review Press editorial director Sullivan, co-authors of The Org: The Underlying Logic of the Office (2013), show how key economic ideas of the past 50 years have given us “new forms of transacting,” most notably in the Internet marketplace (iTunes, Google, Uber, eBay and other e-commerce sites, etc.). In addition to well-known technological advances, “ideas that started in the academic study of economics…have had an outsized effect on how scarce goods are allocated—how, that is, we get the stuff that we want.” The authors’ bright, accessible account begins with the path-breaking research of British economist R.A. Radford, who in 1945 described a thriving POW–camp marketplace in Red Cross goods, and traces the postwar rise of mathematical modeling, which allows economists to make general predictions based on the specifics of any particular situation. Fisman and Sullivan consider the work of leading figures from Paul Samuelson to Kenneth Arrow and show how conceptual groundwork laid by Berkeley economist George Akerlof and his followers has allowed doctorate-level economists to help companies like eBay, Amazon, Airbnb, and Facebook to better compete in the marketplace. Among other things, readers learn how eBay auctions work; how increasingly common “platforms”—credit cards, Facebook, iPhones, etc.—bring together various groups to transact; and how the benefits of market efficiency are applied to the distribution of food among food banks and to such matchmaking challenges as admitting children to schools and connecting aspiring lawyers to clerkships. The authors caution that markets now reach so deeply into our lives that they can “transform” who we are. Market competition “can make us pay bribes, shirk on expenditures that would protect workers…and cut corners on product quality.” With a better understanding of innovations, write the authors, we can decide to what extent markets may need “a bit of help and oversight to perform their miracles of efficiency.”
A thoughtful examination of the mechanics of our one-click world.Pub Date: June 7, 2016
ISBN: 978-1-61039-492-5
Page Count: 224
Publisher: PublicAffairs
Review Posted Online: April 17, 2016
Kirkus Reviews Issue: May 15, 2016
BOOK REVIEW
Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our...
A psychologist and Nobel Prize winner summarizes and synthesizes the recent decades of research on intuition and systematic thinking.
The author of several scholarly texts, Kahneman (Emeritus Psychology and Public Affairs/Princeton Univ.) now offers general readers not just the findings of psychological research but also a better understanding of how research questions arise and how scholars systematically frame and answer them. He begins with the distinction between System 1 and System 2 mental operations, the former referring to quick, automatic thought, the latter to more effortful, overt thinking. We rely heavily, writes, on System 1, resorting to the higher-energy System 2 only when we need or want to. Kahneman continually refers to System 2 as “lazy”: We don’t want to think rigorously about something. The author then explores the nuances of our two-system minds, showing how they perform in various situations. Psychological experiments have repeatedly revealed that our intuitions are generally wrong, that our assessments are based on biases and that our System 1 hates doubt and despises ambiguity. Kahneman largely avoids jargon; when he does use some (“heuristics,” for example), he argues that such terms really ought to join our everyday vocabulary. He reviews many fundamental concepts in psychology and statistics (regression to the mean, the narrative fallacy, the optimistic bias), showing how they relate to his overall concerns about how we think and why we make the decisions that we do. Some of the later chapters (dealing with risk-taking and statistics and probabilities) are denser than others (some readers may resent such demands on System 2!), but the passages that deal with the economic and political implications of the research are gripping.
Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our minds.Pub Date: Nov. 1, 2011
ISBN: 978-0-374-27563-1
Page Count: 512
Publisher: Farrar, Straus and Giroux
Review Posted Online: Sept. 3, 2011
Kirkus Reviews Issue: Sept. 15, 2011
BOOK REVIEW
IN THE NEWS
A readable, persuasive argument that our ways of doing business will have to change if we are to prosper—or even survive.
A well-constructed critique of an economic system that, by the author’s account, is a driver of the world’s destruction.
Harvard Business School professor Henderson vigorously questions the bromide that “management’s only duty is to maximize shareholder value,” a notion advanced by Milton Friedman and accepted uncritically in business schools ever since. By that logic, writes the author, there is no reason why corporations should not fish out the oceans, raise drug prices, militate against public education (since it costs tax money), and otherwise behave ruinously and anti-socially. Many do, even though an alternative theory of business organization argues that corporations and society should enjoy a symbiotic relationship of mutual benefit, which includes corporate investment in what economists call public goods. Given that the history of humankind is “the story of our increasing ability to cooperate at larger and larger scales,” one would hope that in the face of environmental degradation and other threats, we might adopt the symbiotic model rather than the winner-take-all one. Problems abound, of course, including that of the “free rider,” the corporation that takes the benefits from collaborative agreements but does none of the work. Henderson examines case studies such as a large food company that emphasized environmentally responsible production and in turn built “purpose-led, sustainable living brands” and otherwise led the way in increasing shareholder value by reducing risk while building demand. The author argues that the “short-termism” that dominates corporate thinking needs to be adjusted to a longer view even though the larger problem might be better characterized as “failure of information.” Henderson closes with a set of prescriptions for bringing a more equitable economics to the personal level, one that, among other things, asks us to step outside routine—eat less meat, drive less—and become active in forcing corporations (and politicians) to be better citizens.
A readable, persuasive argument that our ways of doing business will have to change if we are to prosper—or even survive.Pub Date: May 1, 2020
ISBN: 978-1-5417-3015-1
Page Count: 336
Publisher: PublicAffairs
Review Posted Online: Feb. 16, 2020
Kirkus Reviews Issue: March 15, 2020
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