After listening to an interview of law prof Joshua Wright (he's also an economist), I Googled for an article mentioned by the talk show host Mike Rosen about behavioral economics. If you have been reading the books about how irrational we are (e.g., Nudge, Predictably Irrational), I suggest you listen to the interview and then read the article "Nudge Nudge, Wink Wink" (The Weekly Standard).
Asked about behavioral economics in an interview recently, the neoclassical economist Gary Becker summed up his reservations. “There is a heck of a difference between demonstrating something in a laboratory, in experiments, even highly sophisticated experiments, and showing that they are important in the marketplace,” he said. “Economics theory is not about how people act in experiments, but how they act in markets.” [I add that these experiments may be of little use in learning how people act in mediations or negotiations.]
Other prominent skeptics, among them Joshua Wright of George Mason Law School and
Gregory Mitchell of the University of Virginia, have begun dismantling the behavioralists’ conceit more systematically. “Even if you discover a real cognitive bias,” Wright said last month, “there will be a good deal of variation within the population, based on cognitive ability and personality traits. And if the bias varies from person to person, you can’t assume that the bias will just ‘scale up,’ in a generalized way, when it’s in the marketplace. Thaler and Sunstein will take a single study of a hundred Duke undergrads and say, ‘Here’s what we found—and here are the public policy implications.’ That’s not scientific. That’s just sloppy.”
Mitchell cut even deeper. He has discovered what he calls a “citation bias within psychology that favors pessimistic accounts of decision making.” Experiments designed to demonstrate irrationality tend to find it. Even the most ingenious experiment can’t replicate how individuals behave in the real world. We change and adapt over the course of months and years, reflect and learn, and call on the help of friends and family. These vital and unpredictable improvisations won’t happen in the vacuum of the college psych lab, with a besmocked Ph.D. student hovering close by.
Click to listen to the interview if the above link does not work.