ANIMAL SPIRITSHow Human Psychology Drives

REASON AND RATIONALITY

By Jon Elster, Princeton University Press, 2009, 79 pages.

Nothing beats a return to the sources and the fundamental, especially in less than a hundred pages and in small format. This is what the famous and verbose Jon Elster. Buff conceptual precision, Elster always succeeded in producing the clarity. This light is necessary to seize the foundations and the errors of the CRT or "rational choice theory".

(In the singular) is a standard, studied by moralists, who opposes passions and interests. It is the common good. The reasons (in the plural, so) are located at the base of the motivation and justification of our decisions. They are considered by economists to explain the action.

Elster (and others), which highlights the limits of the CRT, the man has interests, desires and goals. He also values and beliefs, and composed his preferences based on emotions and the information available to it. This replay large Prism (de Sénèque to Alan Greenspan, passing through La Bruyère, Descartes, Sartre, Proust, Rawls or Montaigne) addresses also some very specific cases: insomnia, impotence, the placing on the market of a pill that would diminish the sense of guilt (in cases of adultery, for example).

The pure CRT is insufficient, considers Elster, since the rational actor is objectively "caught in the trap of desires and beliefs". In seeking the rationality behind and any behaviour, be paid in that critical Elster: the "hyper-rationalité". Costs prior to the decision eventually outweigh the gains expected. The example it is the mode of custody of children when parents separate. A too want to weigh what is best for "the interest of the child", eventually be unfair (not in terms of time to process and intrusion of privacy). The drawing of lots (here between the two parents) could even be more virtuous.

Include this inaugural lesson at the College of France (which can end up with a set of other courses in French on the decision, disinterestedness, the irrationality on the site) that the CRT is useful but limited. It should also be noted that there is consistency between the rational and the emotional. And it is rather good news.

ANIMAL SPIRITS

"How Human Psychology Drives."

the Economy, and Why It Matters

"for Global Capitalism", by George a. Akerlof and Robert j. Shiller, Princeton University Press, 2009, 230 pages.

George Akerlof, Nobel Prize specialist in theory of games, and Robert Shiller, author of "Irrational exuberance", wish to put an end to the founding myths of the neoclassical and neo-Liberals. They want to dismantle the illusion of rationality. Found in Keynes a vision of man, potentially taken away by his instincts and drives (its "animal spirits"), they hear the trial to charge of the CRT and argue for a new Keynesian economics.

Their replay of Keynes is to actually describe "how the economy works" in not limited so seize what is rational. That it be taken into account, to observe and analyze fluctuations, what are these "animal spirits". They are studying in detail five traits: confidence, the aspiration to equity, the temptation of corruption, the money illusion (which is to underestimate the consequences of inflation), the propensity to tell and believe (even false) stories.

With their original theorising the two authors believe finally answering important questions (depressions why why central banks unemployed why why the poor). They are however only imperfectly. They bring elements, usually of social psychology, but there is no explosive lighting.

To revolutionize the economics, they also revolutionize public intervention. The State should be there to restrain and guide the animal instincts in an era where, as noted by the authors, it values more poker than the bridge. This was to reduce the magnitude of fluctuations related to the market, by limiting the excesses and condemning the sheer scale. The book is particularly ambitious. Is it a timely reminder that the free market is neither perfect nor stable, human (generally hesitant to risk and the future) is not a calculator automaton only interested motives, it should not lead to the "invisible hand", dear to Adam Smith, permanently fire...

The book shows, all the same, that we are driven by "instincts" and that there are predators in the world, which is of concern, it is true...

NUDGE

"improving decisions about health, wealth and Happiness", by

Richard h. Thaler and Cass r. Sunstein.

Yale University Press, 2008, 293 pages.

"nudge" is a truly original work. Accurate, unexpected, it also has the virtue to be quite funny. Seriously and smile, mixing legal and economic analyses with input from the cognitive sciences, the Professor of Economics, behavioural Richard Thaler and Cass Sunstein jurist (just to reach the Obama administration) are extremely useful work. In the trial of the fundamentalism of the CRT, they provide a set of observations and recommendations solid and convincing. They oppose first real (you and me) humans homo oeconomicus of theory. It, especially with a costume of a banker, takes to his rank. Thaler and Sunstein, by images and examples, are State of multiple bias, dislikes and limits of human psychology.

The two authors then propose a line of action and intervention that they named "liberal paternalism" to help people (always limited in information, will, intelligence) to make complex or costly choices (investment in a pension fund, exasperated and then regretted e, marriage mail response). Their idea from repeated observations and lessons from the most serious studies of Psychology social is to preserve the freedom to choose, while encouraging people to make good decisions. The Thaler and Sunstein is to import these lessons of marketing in the public sphere (tax optimization, cleanliness of public toilets, fight against addictions, energy consumption, savings).

This multitude of anecdotes is not born a new general theory of human behaviour and economic analysis. But this is not the object. It is fundamentally matter for innovation of public policy.

This book whose title "small bourrade friendly" or "coup de pouce" would be quite difficult to make deserves a translation. In any case, with the eponymous blog (he makes simple discoveries, without ideology General and overhanging happy drive.) It also shows that public action can properly and humanely lie between two models, the interventionist intervention and full laissez-faire.