"When we ate nuts during a meal, we children were allowed to take two guaranteed nuts or four uninsured ones. The two guaranteed ones could be replaced if they proved to be rotten. The uninsured alternative, on the other hand, meant that we had to accept the nuts as they came, good or bad. Why did my brother always opt for the insured nuts? Did he wish to avoid the loss entailed by three or more bad nuts?" So Legrenzi starts his voyage among the mental mechanisms that govern our choices in the field of economics - an obstacle course strewn with cognitive traps. How should we invest our savings? Should we consume or set aside? Should we do things on our own or delegate to others? Economic decisions are always made in a context of risk and uncertainty, two elements that nature has never taught us to master. Emotion, regret, illusion, and inadequate time windows deceive us and lead us to fear unlikely losses or ignore authentic dangers. This book is a self-defence handbook that allows readers to guard against those would take advantage of their weakness, but most of all against themselves. It is one thing to deliberately choose prudence, quite another to impoverish oneself without realizing it or even against one's will.
Paolo Legrenzi teaches Cognitive Psychology at Ca' Foscari University in Venice.