Akerlof and Shiller have good points, excellent stories, and a clear aim in Phishing for Phools. The aim is to convince economist colleagues that all market outcomes aren’t perfect. I applaud their aim but their conceptualization assumes consumers (and others) are robots with a monkey on our backs preventing us from being “fully rational”. I’d say, however, that we are the monkey. One can’t really think of decision making as a “fully rational” robot being put off by a monkey and therefore describe appeals to the monkey as phishing (manipulation and deception). Why do economic robots want anything at all? In politics why would a robot care who won the election, and if they don’t care what does it mean to trick them?
You can better design products to make them appeal more to the consumer. This doesn’t seem to the “phishing” that the book envisages but it seems to be lumped in with it in their conception. Yes the smells that radiate from Cinnabon stores influence weak-willed consumers to buy food that they don’t need to consume, but who “needs” Cinnabon? Our monkeys enjoy Cinnabon but would the world be a better place if all stores had no smells given the smells add to the enjoyment of those eating there. The smells both improve the product and tempt the weak willed which means smells aren’t really conclusive evidence that any consumers are being tricked.
(The authors also conflate marketing and advertising which is unfortunate. See the “Evolution of Marketing” on page 54, Akerlof and Shiller, 2015).
They describe voters as “informational phools” — not fully informed — and “psychological phools” — who respond differently to different messaging, (Akerlof and Shiller, 20915, page 75). They are surely right but given most non-economists believe that voters aren’t perfect decision-makers it be great to address a bit more just how “phoolish” voters are.
This book seems to have been written mainly to influence economists that behavioral effects matter — lets hope it works.
Read: George A. Akerlof and Robert J. Shiller, (2015) Phishing for Phools: The Economics of Manipulation and Deception, Princeton University Press.