Economics Wins, Psychology Loses, and Society Pays

28 Pages Posted: 10 Mar 2005

See all articles by Deepak K. Malhotra

Deepak K. Malhotra

Harvard Business School - Negotiation, Organizations & Markets Unit

Max H. Bazerman

Harvard Business School - Negotiations, Organizations and Markets Unit

Date Written: 2005

Abstract

Economics is the social science that dominates public policy debate and formulation. Economic assumptions lay the foundation for policy initiatives and economic principles provide the framework for design of regulations that govern our society. We argue that other social sciences, and in particular psychology, have a great deal to offer, and that our failure to incorporate the lessons from other social sciences leads to inferior public policy. The chapter outlines five predominant myths, adapted from pervasive economic assumptions, which serve as guiding policy principles and destroy value in society. We elaborate on the consequences of our over-reliance on these myths, and demonstrate how psychological lessons and insights might inform policy decisions.

Suggested Citation

Malhotra, Deepak K. and Bazerman, Max H., Economics Wins, Psychology Loses, and Society Pays (2005). Harvard NOM Working Paper No. 05-07. Available at SSRN: https://ssrn.com/abstract=683200 or http://dx.doi.org/10.2139/ssrn.683200

Deepak K. Malhotra

Harvard Business School - Negotiation, Organizations & Markets Unit ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Max H. Bazerman (Contact Author)

Harvard Business School - Negotiations, Organizations and Markets Unit ( email )

Soldiers Field
Boston, MA 02163
United States
617-495-6429 (Phone)
617-496-4191 (Fax)

HOME PAGE: http://www.people.hbs.edu/mbazerman

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