Misbehaving: The Making of Behavioural Economics

Misbehaving: The Making of Behavioural Economics traces how Richard Thaler and a generation of economists challenged the rational-actor model that dominated the field for decades. Rather than assume people always make logical financial decisions, behavioural economics examines the systematic ways humans deviate from rationality - and why those deviations matter for markets, policy, and everyday life.

Thaler draws on decades of research, real-world experiments, and case studies to show how cognitive biases, mental accounting, and social preferences shape economic behaviour. The book moves from foundational concepts like loss aversion and anchoring through to practical applications in retirement savings, investment decisions, and consumer choice. Each chapter builds on concrete examples: why people hold losing stocks too long, how default options influence 401(k) enrollment, what behavioural insights reveal about fairness and trust.

This is an account of how a heterodox idea became mainstream economics, written by someone central to that transformation. The narrative spans academic debates, collaboration with psychologists like Daniel Kahneman, and the gradual acceptance of behavioural thinking in universities and policy circles worldwide.

• Covers cognitive biases, heuristics, and mental accounting frameworks
• Includes experimental evidence and real-world market examples
• Explores applications to finance, consumer behaviour, and public policy
• Written by a Nobel Prize-winning economist
• Accessible to general readers without advanced economics background

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