Nudge

Nudge

Improving Decisions About Health, Wealth, and Happiness

Richard H. Thaler, Cass R. Sunstein

in the process of social contagion, public knowledge is subject to a kind of escalation or spiral, in which most people come to think that optimistic view is correct simply because everyone else seems to accept it. As the media endorses that view, people end up believing that we are in a “new era,” and feedback loops help to bring about ever-increasing prices. In his words, the “price-story-price loop repeats again and again during a speculative bubble.” Eventually the bubble is bound to pop, because it depends on social judgments that cannot be sustained over the long term.

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