The Undoing Project by Michael Lewis
The Undoing Project is a beautiful book on Daniel Kahneman and Amos Tversky, two Israeli psychologists who revolutionized their field and ushered in behavioral economics.
It’s easy to say, “Of course humans aren’t rational,” as traditional microeconomics assumes. But Kahneman and Tversky went well beyond that to show that human biases are often systematic and therefore predictable. One of their earliest–and most famous–experiments is there Belief in Small Numbers where they showed that everyone, including a conference of trained statisticians(!) make consistent, erroneous mistakes.
As an American, I found it interesting how much importance Israel gave to psychology in general. In part this is due to their constant war footing and being surrounded by potentially hostile regimes on all sides. As an example, in his early twenties Kahneman was put in charge of the psychological evaluations the Israeli army used for evaluating officers. He quickly showed that a series of objective questions had far greater predictive performance than all the intuition of humans. And the Israeli Army listened to him! After all, getting this right was a matter of huge importance to them.
Lewis is a fluid writer–one of my very favorites–and the book is really a platonic love story between two men who spent their careers working together. Tragically Tversky would pass from cancer before the two were awarded the Nobel Prize in Economics for their work.