George Akerlof, Professor at Georgetown University and Nobel Laureate in Economics, will give a lecture on the topic of “Phishing for Phools” as the second annual Schelling Lecture at noon on Tuesday, March 3 at the School of Public Policy. The lecture is co-sponsored by the Maryland Center for Economics and Policy.
Based on work with fellow Nobel winner Robert Shiller, Akerlof explores dimensions in which markets do not properly serve individuals and our society, even when people act rationally as is typically assumed in economic analysis. This is a study of market-based temptation. Akerlof labels a “phool” as someone who makes an intelligent (i.e. rational) decision, but mistakenly so. And then “phishing” is the attempt of markets to take advantage of these mistakes. An example cited by Professor Akerlof is the familiar sweet smell wafting from a Cinnabon outlet in an airport or mall. It is profit-maximizing for the business to entice customers, but this has the result of encouraging some people to indulge in the pastry who would be better off if they did not. Akerlof connects the phenomenon of “phishing for phools” to broader economic forces, notably in providing an explanation for the recent financial crisis.
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