RelativeResourceManager.pdf

Introduction Why do smart people make dumb decisions? Maybe you know people who consistently make good decisions. No doubt, you know others who repeatedly make self-destructive decisions. Often the people who make bad decisions are not dumb people. What is happening? A few years ago, a group of economics professors began seeing this same thing: smart people making bad decisions. Economic models predict that people will make rational decisions. But, the economic models didn?t fit. People were making bad, irrational decisions. The bad decisions were consistent. They were persistent. They were predictable. These discoveries led to a new field of study called behavioral economics. Behavioral economics explores our judgment and decision-making processes. It examines areas where people are predictably irrational. The discoveries in this new science tell important news about how all of us make decisions. Not only can behavioral economics reveal where we make bad decisions, it can also show us why. Understanding these mechanisms gives us valuable tools. As we begin to understand how we make decisions, we can learn how to improve these processes. The result is not just about avoiding bad decisions. While disaster is easily linked to decisions, so is success. Success may come from one big decision. But, it usually results from consistent decisions over a long time. This new science of behavioral economics can provide us with the tools to make the small, consistent decisions over time that lead to success. We will look at how these rules explain disastrously bad decisions like addictions, violence, and risky sex. We will also see how these same rules explain great successes in fields such as business, athletics, relationships, science, the arts, and academics. There is nothing more fundamental to success, to failure, and to life in general than our decisions. By taking the time to learn about the mechanisms behind our judgment and decision-making, we can give a wonderful gift to ourselves. By changing our decision environment and processes, we can become the people that we hope to be. FACS