Our economic models are outdated. We can do better.
That individuals will always act rationally, in their own self-interest, was once a basic economic assumption. Daniel Kahneman and Amos Tversky ruptured that cozy notion, utilizing psychological insights to enrich the economic understanding of human behavior. Kahneman and Tversky cast a new light on Adam Smith’s invisible hand, portraying it not as a mechanism that aggregates mass self-interest into social utility, but as a bundle of subconscious cognitive biases to which we are all victims.
But just as economics was revolutionized only when the budding claims of psychology gained enough steam to overturn the antiquated economic model of rationality, a new field may now be nearing the threshold to disrupt the very notion of self-interest altogether.
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