Akerlof and Shiller believe that once we understand human psychology, we will be a lot less enthusiastic about free markets and a lot more worried about the harmful effects of competition. In their view, companies exploit human weaknesses not necessarily because they are malicious or venal, but because the market makes them do it. Those who fail to exploit people will lose out to those who do.
.. In their view, phishing for phools “is the leading cause of the financial crises that lead to the deepest recessions.”
.. In a reversal of Adam Smith, Akerlof and Shiller contend that the invisible hand of the market guarantees phishing. Consider Cinnabon, whose brilliant motto is “Life Needs Frosting,” and which attracts customers with a seductive smell (and which has not made caloric information on its products at all easy to find).
.. Akerlof and Shiller contend that presidents are sold in essentially the same way, as “modern statistical techniques now tell marketers and advertisers—both private and political—when and how to phish, just as modern techniques in geology tell the oil and gas companies where and how to drill.” They single out the 2012 Obama campaign for its use of statistical testing “as a new art form.” In their view, campaigns now know how to target “voters individual-by-individual,” with the help of modern statistical techniques.
.. With respect to the latter, they are concerned about a clever electoral strategy commonly used to hook “phishable voters.” With this strategy, politicians endorse policies that “appeal to the typical voter on issues that are salient to her, and where she will be informed,” while also adopting a “stance that appeals to donors” on issues on which the typical voter is uninformed.
.. Whenever “we have a weakness—if we have a way in which we are phishable—the phishermen will be there in waiting.”