“A Behavioral Economist’s Nightmare”

Andrew Sullivan —  Nov 23 2012 @ 1:31pm

That's what Kevin Roose calls today:

The big problem with Black Friday, from a behavioral economist's perspective, is that every incentive a consumer could possibly have to participate — the promise of "doorbuster" deals on big-ticket items like TVs and computers, the opportunity to get all your holiday shopping done at once — is either largely illusory or outweighed by a disincentive on the other side. It's a nationwide experiment in consumer irrationality, dressed up as a cheerful holiday add-on.

Relatedly, Razib Khan outlines the limits of crowd wisdom:

[T]he economist’ faith on the power of mass market signals (“the crowd”) often strikes natural scientists as peculiar. When talking about elections it does seem that the “crowds” are going to be superior to the judgement of individuals or powerful quantitative models (after all, elections are aboutcrowds!).  But there is a long history of the crowd being wrong in the very specific areas of natural science which rely on contingent and formal fameworks to make non-obvious predictions on somewhat complex systems. But that’s because in some areas of the natural sciences humans have a systematic bias due to intuitive psychological tendencies. Aristotle’s model was just more intuitively plausible than those of his skeptics’ for a few thousand years. And quantum theory would never win a crowd-vote. One Bohr is worth a thousand other humans. I think this long history of the worthlessness of mass market intuition across large swaths of the territory of science is why many scientists find technocratic solutions very appealing. The formal reflections of the elect has worked miracles in physics, so why not “social physics” (i.e., economics)?