Phishing for Phools: Akerlof lecture

 •  Filed under behavioral economics and psychology, PIIE

Event Transcript: Phishing for Phools: The Economics of Manipulation and Deception.

One of the noteworthy passages:

So back in 1985, father and son, Rich and Greg Komen of Seattle founded Cinnabon, Inc. and they had a marketing strategy. They would open up outlets that baked the world’s best cinnamon roll. Now Cinnabon has 880 calories, which is a lot, and they have a nice motto, “Life needs frosting.” And you’ll see that frosting there. So the Komens took a great deal of effort to develop their marketing strategy, especially cinnamon, which they chose carefully, is said to attract humans by its smell, just the way pheromones attract moths. So most of us probably take it for granted — we take it for granted that there just happens to be such an outlet right there where we’re waiting for our delayed flight or at the mall. ...

... many of our choices differ from what we really want or alternatively they differ from what’s good for us. So we’re not generally aware of that monkey on our shoulder. So, in the absence of some curbs on markets, we reach an economic equilibrium where the monkeys on the shoulder are substantially calling the shots.