"There are endless ways to be irrational"

What would highways look like if they were designed by economists?

First of all, there would be no shoulder at the side of the road, because why would you ever pave something where nobody is supposed to drive anyway? And those raised ‘bubble lines’ that indicate to a driver that he is leaving his lane? Why would you need those either, because people know they are supposed to drive within the lines. Indeed, we might not have any lanes or speed limits, because why restrict people like that? What I am describing is a situation in which you assume that people are perfectly rational beings who know what they are doing, so you build-in no room for error. While this is an extreme example, this is the basic idea of perfect economic rationality.

Behavioral economist Dan Ariely, author of the book, Predictably Irrational, contrasts the role of rationality in economic theory with real-world decision-making in the Forbes India piece linked above.

Hat tip: Putting People First.

Wayne