Review: Phishing for Phools: The Economics of Manipulation and Deception

Phishing for Phools: The Economics of Manipulation and Deception
Phishing for Phools: The Economics of Manipulation and Deception by George A. Akerlof

My rating: 1 of 5 stars

Akerlof and Shiller are clearly very good economists. But this book feels like they had to fulfill a book deal they made 5 years ago. There are much better books for many of the points they make (see below).

Topics are all over the place with no clear common thread, the phrase Phishing for Phools occurs about 500 times but is not a very clear concept (I did like the “mining a reputation”, that concept makes intuitive sense). Adding “PH” to words is only gimmicky. The afterword reads like a glowing review of their own book and makes (too) large claims on novelty and impact.

All the crossreferences and “here is what we’re going to say, we say it, here is what we said” (meta-text signposting) annoyed me in a book of 175 pages (the last 100 pages are notes, index and references)

“A phool is someone who is succesfully phished” (p xi). Two kinds of phools: psychological and informational. Psychological phools come in two types: emotions overcome common sense or cognitive biases lead the phool to misinterpret reality. “Information phools act on information that is intentionally crafted to mislead them” (p xi)

Goldman Sachs partner John Whitehead coined 14 principles: “Our clients’ interests always comes first (…) If we serve our clients well, our own succes will follow”. Quite different from the Vampire Squid Goldman is now sometimes portrayed as.

Pretty bold claim: “Securities regulation is one of the most essential government functions” (p.156). I think I can name a couple more important ones (education, infrastructure, defense even). Of course regulation is important (I work at a regulator myself), but this statement tells us a lot about the lens these authors view the world. And it is also ironic to hear this from two men who praise free markets so much. Albeit they also warn for the free-market as a two-edged swords (also has downside).

“Free markets make people free to choose. But they also make them free to phish, and free to be phished” (p.162) The follow this with a strawman argument “Ignorance of those truths is a recipe for disaster”. A better book on choice: The Paradox of Choice: Why More Is Less

“the role of narratives, which is perhaps our book’s most important takeaway” (p175-176) If you’re interested in narratives, read Don’t Think of an Elephant! Know Your Values and Frame the Debate: The Essential Guide for Progressives.

Chapter six is on Pharma; skip it and read Bad Pharma: How Drug Companies Mislead Doctors and Harm Patients

Chapter ten on junk bonds and Milken; read Barbarians at the Gate: The Fall of RJR Nabisco

People are not rational; read Dan Ariely, e.g. Predictably Irrational: The Hidden Forces That Shape Our Decisions and how we all fudge (not phish): The Honest Truth About Dishonesty: How We Lie to Everyone – Especially Ourselves. Or on psychology and economics: Thinking, Fast and Slow. A good, more applied book: Switch: How to Change Things When Change Is Hard
View all my reviews

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