This is a relatively straightforward book by the Noble Prize winner Richard Thaler. The book mainly highlights that in board rooms economist prepares theories to function economy assuming humans are rational for example reducing interest rates will increase demand for loans leading to higher GDP. It seems like a simple straight line. In reality humans work in a complex adaptive system with emotions - they are irrational majority of the times. It is tremendously important to understand human behavior and emotions to even understand 1% of what is going on in financial & economic framework.
Important Points from the book
1. Human have Loss Aversion Bias: 100 rs loss causes more pain as compared to happiness obtained after the same 100 rs gain
2. Hence humans wants to avoid losses more than they want to achieve gains.
3. Theoretical economics assumes humans are rational whereas scientific experiments have proven humans make decisions not consciously based on facts but majority time based on emotions which leads to irrational decisions.
4. Sometimes life is just an outcome of luck rather than intelligence - Humans don't like to accept they are lucky.
5. The price of a product is not as important as the value that it is perceived to have in the eyes of buyer.
6. Loss Aversion causes risk aversion which leads to entrepreneurs not taking advantage of profitable opportunities that contain even reasonable risk.
7. Entrepreneurs should not avoid risk rather they should focus on taking calculated risk.