Cornell prof talks on psych and econ

Explaining that people's actions do not always follow the laws of economics, Cornell Economics Professor Richard Thaler discussed how economics and psychology interact in a 90 minute speech yesterday. Thaler, a professor at Cornell's business school and author of a column in Anomalies, a quarterly economic journal, said that people tend to make foolish economic decisions because of psychological influences. Thaler, who was a pioneer in the field of relating economics and psychology, has his own theory of how the two areas relate. Thaler said that people base their economic decisions on three factors: optimization of resources, equilibrium -- the intersection of supply and demand -- and self-interest. The Cornell professor clearly explained his theory by using anomalies to demonstrate how the combination of these three factors lead to a decision. Thaler explained that a person is willing to pay more for the same brand of beer in an expensive hotel than in a convenience store if they are not going to drink it in either place because people believe the hotel has larger expenses. Following his speech, several audience members asked Thaler questions about his theory. Students and faculty at the lecture said they found it very entertaining. "It was very interesting," said Psychology graduate student Carol Miller. Decision Sciences Professor Howard Kunreuther said the lecture was also very informative. "It provided an interesting set of anomalies that are difficult to correct," he said.

Please note All comments are eligible for publication in The Daily Pennsylvanian.