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Markets and manipulation : time for a paradigm shift ?

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  • Basu,Kaushik

Abstract

There is a growing appreciation in economics that people have emotional vulnerabilities, commitments to social norms, and systematic irrationalities, which impact their decision making and choice in the marketplace. The flip side of this is that human beings are susceptible to being manipulated by unscrupulous agents who are single-minded about marketing their services and wares. This paper reviews George Akerlof and Robert Shiller's book, Phishing for Phools: The Economics of Manipulation and Deception, alongside other writings in the field, and discusses how this research agenda can be taken forward. The paper shows how this new research can shed light on the ubiquity of corruption in so many societies, and proposes ideas for controlling corruption.

Suggested Citation

  • Basu,Kaushik, 2016. "Markets and manipulation : time for a paradigm shift ?," Policy Research Working Paper Series 7653, The World Bank.
    • Handle: RePEc:wbk:wbrwps:7653
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    References listed on IDEAS

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    1. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54, National Bureau of Economic Research, Inc.
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    3. Ispano, Alessandro & Schwardmann, Peter, 2017. "Cooperating over losses and competing over gains: A social dilemma experiment," Games and Economic Behavior, Elsevier, vol. 105(C), pages 329-348.
    4. Cass R. Sunstein & Richard H. Thaler, 2003. "Libertarian paternalism is not an oxymoron," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 48(Jun).
    5. Basu, Karna, 2014. "Commitment savings in informal banking markets," Journal of Development Economics, Elsevier, vol. 107(C), pages 97-111.
    6. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    7. Roland Bénabou & Jean Tirole, 2011. "Identity, Morals, and Taboos: Beliefs as Assets," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(2), pages 805-855.
    8. Richard H. Thaler & Cass R. Sunstein, 2023. "Libertarian paternalism," Chapters, in: Cass R. Sunstein & Lucia A. Reisch (ed.), Research Handbook on Nudges and Society, chapter 1, pages 10-16, Edward Elgar Publishing.
    9. Hoff, Karla & Pandey, Priyanka, 2014. "Making up people—The effect of identity on performance in a modernizing society," Journal of Development Economics, Elsevier, vol. 106(C), pages 118-131.
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    11. Basu, Kaushik, 1989. "A Theory of Association: Social Status, Prices and Markets," Oxford Economic Papers, Oxford University Press, vol. 41(4), pages 653-671, October.
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    Cited by:

    1. Gomes, Orlando & Frade, João, 2019. "“Fool me once, …”: deception, morality and self-regeneration in decentralized markets," Journal of Economics, Finance and Administrative Science, Universidad ESAN, vol. 24(48), pages 312-326.
    2. Devlina & Santosh Kumar Sahu, 2023. "Bureaucratic and Societal Determinants of Female-Led Microenterprises in India," Administrative Sciences, MDPI, vol. 13(3), pages 1-15, February.

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    More about this item

    Keywords

    Regulatory Regimes; Legislation; Social Policy; Judicial System Reform; Equity and Development; Legal Reform; Achieving Shared Growth; Pro-Poor Growth; National Governance; Government Policies; Public Finance Decentralization and Poverty Reduction; Legal Products; Public Sector Economics; Youth and Governance;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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