Phishing for Phools: The Economics of Manipulation and Deception

In This Review

Phishing for Phools: The Economics of Manipulation and Deception
by George A. Akerlof and Robert J. Shiller
Princeton University Press, 2015
288 pp.
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This interesting book is written by economists mainly for economists, but it includes many entertaining stories about business behavior (and some disturbing ones), told in lively and accessible prose. Its central message is that the concept of the competitive market as a socially optimal arrangement, as conveyed by the typical college-level economics textbook, is not merely too reductive but actually fundamentally wrong. The profit motives that usefully lead businesses to compete in pricing and innovation also lead them to appeal to their customers’ baser instincts and even to deceive people into making purchases; the snake oil salesmen of a century ago are still around today, just in different forms. The authors argue that the risk comes from the fact that misleading tactics often work and that they can become systematic. Economists and others need to be aware of this as they frame policy goals.