Reason, strategy and discovery

It is cold at 6.40 in the morning of a March day in Paris, and seems even colder when a man is about to be executed by firing squad. At that hour on March 11,1963, in the main courtyard of the For d’lvry a French Air Force colonel stood before a stake driven into the chilly gravel as his hands were bound behind the post, and stared with slowly diminishing disbelief at the squad of soldiers facing him twenty metres away.1

Some people like to read.The idea that Carlos would be reading Frederick Forsyth’s The Day of the Jackal certainly seemed plausible to the journalist who gave Carlos the name,The Jackal. And many people probably just assume that the book is about Carlos. On the other side of the fence, James Grady’s Six Days of the Condor, a suspense novel about a CIA ‘reader’ that was made into the political thriller Three Days of the Condor starring Robert Redford, prompted the critic John Simon (1982, pp. 195-198) to conclude,‘we must be grateful to the CIA: it does what our schools no longer do—engage some people to read books’. Reading, whether it’s academic literature, fiction or non-fiction, is a matter of taste, chance, practice and timing. What we find to read, how we approach reading it and what we see in it are shaped by our decisions and our circumstances.That this might determine whether one has read Peter Wright’s Spycatcher or John Le Carre’s Tinker, Tailor, Soldier, Spy or Max Allan Collins’‘Quarry’ novels is quite obvious. That it applies with equal force to our deliberate searching for relevant information is not quite obvious. And, it will surprise many people to learn that the core of behavioural economics research is still not that easy to find.

On New Year’s Day 1980, there was no such thing as behavioural economics. Prospect theory had made its appearance just a few months before but it was just one of a number of‘generalisations’ of expected utility theory. Herbert Simon had won the Nobel Prize for economics in 1978 for‘his pioneering research into the decision-making process within organisations’ but despite the far-reaching implications of Simon’s work, it was considered by most economists to be more business economics and administrative management than economics and psychology. In fact, Kahneman (2011) barely mentions Simon at all and obviously views the ‘heuristics and biases’ research program as something quite distinct. In 1980, Richard Thaler had only just completed a year at Stanford with Kahneman and Tversky, both of whom had only recently taken up posts in North America— Tversky at Stanford and Kahneman at the University of British Columbia. Jimmy Carter was president and the Iran hostage crisis was less than two months old. The first issue of the American Economic Review that year contained articles on unemployment, oligopoly, inflation, wages and monetary growth.There was one article with the word ‘behavioural’ in its title but it wasn’t about human behaviour.

Kahneman & Tversky’s (1979) prospect theory article was published in perhaps the most esoteric of places, in the journal Econometrica. Although there are some dedicated behavioural economics or behavioural finance journals, much of the work in behavioural economics is dispersed. As might be expected, then, there are many hidden gems that have not received wide attention and would not be easily spotted in searches of the literature. Although it is certainly far from complete, what we want to do here is provide a few roadmaps to the literature. Actually, these are more like subway maps.There is a redline running through the centre. It starts with prospect theory and follows the mainstream of behavioural economics research that was established by Richard Thaler. As we have alluded to a few times, prospect theory was not in such a good position early on. Other fountainheads might have prevailed. In this, our final chapter, we present several maps with significant waypoints. One of these starts with prospect theory. The other three start from other places. Sometimes the work intersects but mostly the pathways are distinct. We haven’t the space to work through the pattern predictions that might be derived from these other streams of research but by charting some of the significant features of this literature, we hope that the relevant results will be less neglected than they otherwise might be.

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