The Irrational Economist

Another good read edited by Erwan Michel-Kerjan and Paul Slovic. Short punchy chapters addressing vital topics of risk perception, decision making and risk management.

Table of Contents
Introduction
An Idea Whose Time Has Come
Erwann Michel-Kerjan and Paul Slovic

PART ONE
IRRATIONAL TIMES 9

1 Superstition
A Common Irrationality?
Thomas Schelling 11

2 Berserk Weather Forecasters, Beauty Contests, and Delicious Apples on Wall Street
George A. Akerlof and Robert J. Shiller 16

3 Subways, Coconuts, and Foggy Minefields: An Approach to
Studying Future-Choice Decisions
Robin M. Hogarth 21

4 The More Who Die, the Less We Care
Paul Slovic 30

5 Haven’t You Switched to Risk Management 2.0 Yet?
Moving Toward a New Risk Architecture
Erwann Michel-Kerjan 41

PART TWO
ARE WE ASKING THE RIGHT QUESTIONS?
ECONOMIC MODELS and RATIONALITY 51

6 A Two-Edged Sword
Implications of Decision Psychology for Decision Analysis
Paul J. H. Schoemaker 53

7 Constructed Preference and the Quest for Rationality
David H. Krantz 65

8 What If You Know You Will Have to Explain Your Choices to Others
Afterwards? Legitimation in Decision Making
Paul R. Kleindorfer 72

9 Neuroeconomics: Measuring Cognition and Brain Activity During
Economic Decision Making
Colin F. Camerer 79

10 The Useful Brain
How Neuroeconomics Might Change Our Views on Rationality and a
Couple of Other Things
Olivier Oullier 88

PART THREE
INDIVIDUAL DECISIONS IN DANGEROUS and UNCERTAIN WORLD 97

11 Virgin Versus Experienced Risks
Carolyn Kousky, John Pratt, and Richard Zeckhauser 99

12 How Do We Manage an Uncertain Future?
Ambiguity Today Is Not Ambiguity Tomorrow
Ayse Öncüler 107

14 Dreadful Possibilities, Neglected Probabilities
Cass R. Sunstein and Richard Zeckhauser 116

15 Why We Still Fail to Learn from Disasters
Robert Meyer 124

16 Dumb Decisions or as Smart as the Average Politician?
Economic and Behavioral Explanations for Insurance Demand
Mark V. Pauly 132

17 The Hold-Up Problem
Why It Is Urgent to Rethink the Economics of Disaster
Insurance Protection
W. Kip Viscusi 142

PART FOUR
MANAGING and FINANCING EXTREME EVENTS 149

18 The Peculiar Politics of American Disaster Policy
How Television Has Changed Federal Relief
David Moss 151

19 Catastrophe Insurance and Regulatory Reform After the
Subprime Mortgage Crisis
Dwight M. Jaffee 161

20 Toward Financial Stability: Lessons from Catastrophe
Reinsurance
Kenneth A. Froot 171

21 Economic Theory and the Financial Crisis
How Inefficient Incentives Can Lead to Catastrophes
Kenneth Arrow 183

22 Environmental Politics
Are You a Conservative?
Geoffrey Heal 192

23 Act Now, Later, or Never?
The Challenges of Managing Long-Term Risks
Christian Gollier 200

24 Climate Change
Insuring Risk and Changes in Risk
Neil Doherty 210

25 International Social Protection in the Face of Climate Change
Developing Insurance for the Poor
Joanne Linnerooth-Bayer 220

PART FIVE
WHAT DIFFERENCE CAN WE MAKE? 231

26 Are We Making a Difference?
Baruch Fischhoff 233

27 Thinking Clearly
The Importance of Training Policy Makers in Decision Sciences
Ralph L. Keeney 239

28 Decision Making
A View on Tomorrow
Howard Raiffa 248

29 Influential Social Science, Risks, and Disasters
A View from the National Science Foundation
Robert E. O’Connor and Dennis E. Wenger 254

30 Reflections and Guiding Principles for Dealing with
Societal Risks
Howard Kunreuther 263

Acknowledgments
An Unusual Journey: Homage to Howard Kunreuther 275
Notes 281
About the Contributors 297
Index 311