Lars Peter Hansen Quotes

Even the most analytical thinkers are predictably irrational; the really smart ones acknowledge and address their irrationalities.

Except for some effects that I attribute mostly to age, my intuitive thinking is just as prone to overconfidence, extreme predictions, and the planning fallacy as it was before I made a study of these issues.

I love Richard Thaler's 'Quasi Rational Economics.' A collection of some of his most interesting and inventive essays, the real foundation of behavioral economics.

The lesson of my field, behavioral economics, is that we need to understand the ways in which we differ from the rational human assumed in standard economic theory.

I started in business journalism from the outside, so when I started writing about markets and business, I was struck by the fact that markets seemed to work well even though people are often irrational, lack good information and are not perfect in the way they think about decisions.

It is true that from a behavioral economics perspective we are fallible, easily confused, not that smart, and often irrational. We are more like Homer Simpson than Superman. So from this perspective it is rather depressing. But at the same time there is also a silver lining. There are free lunches!

We historians are increasingly using experimental psychology to understand the way we act. It is becoming very clear that our ability to evaluate risk is hedged by all sorts of cognitive biases. It's a miracle that we get anything right.

Interestingly, human irrationality is a hot topic in economics at the moment. Behavioural economics it's called, on the cusp of economics and psychology.

I like to think that since I was about 19, I have studied human decision-making and problem-solving.

Mankind are governed more by their feelings than by reason. Events which excite those feelings will produce wonderful effects.

There is much evidence that people are not rational, in the economist’s sense; nor do they take into account expectation, in the precise interpretation of that word. As a result, economic theory often does not correspond with what happens in the market. Some would argue that we need descriptive economics. I would argue that all should be taught about probability, utility, and MEU (maximization of expected utility) and act accordingly.

The sad truth is that many behavioral economists know very little about psychology.

The notion of humans as inherently rational beings has been not only trashed in economics, but trashed in all the best research on moral decision-making.

Humans are hard-wired to be irrational when it comes to financial decisions. We must understand that so we don't become the sucker at the poker table.

We accept that people are irrational for good Darwinian reasons. But I don't think we should be so pessimistic as to think that therefore we're forever condemned to be irrational.

People are irrational. What I want to do is let's take the irrational aspects out of it and let's just break this down. And you and I, let's go and see if we can't master this thing, a few steps at a time without giving up your day job, without having to give up your whole life.

My clinical psychologist wife of 40 years has always had a close intellectual influence on me. When I was beginning to talk openly in the economics profession about irrationality in decision-making, I received a lot of criticism. Ginny would support my views and remind me that a whole other profession - psychology - studies people's irrational sides.

We are all far less rational in our decision-making than standard economic theory assumes. Our irrational behaviors are neither random nor senseless: they are systematic and predictable. We all make the same types of mistakes over and over, because of the basic wiring of our brains.

The great thing about behavioural psychology and economics is that they help us to see that there are actually pretty good reasons why human beings swing from greed to fear, and why we're not really calculating machines or utility-maximisers.

You have to think an awful lot about your motivations or people's behavioral intentions or what their body language can indicate or what's really going on or what makes people sometimes do, sometimes, the irrational things they do.

My research career has been devoted to understanding human decision-making and problem-solving processes. The pursuit of this goal has led me into the fields of political science, economics, cognitive psychology, computer science and philosophy of science, among others.

Personally, I don't see old economics and behavioural economics as opposed. It is useful to assume people are rational as a good approximation to their long term behaviour, but it would be unwise not to think how in practice their behaviour may deviate from that simplifying assumption.

The mistakes we make when we try to imagine our personal futures are also lawful, regular, and systematic. They, too, have a pattern that tells us about the powers and limits of foresight in much the same way that optical illusions tell us about the powers and limits of eyesight.

Humans make errors. We make errors of fact and errors of judgment. We have blind spots in our field of vision and gaps in our stream of attention. Sometimes we can't even answer the simplest questions.

Economic theory does not work with human beings. We are far too messy.