Decisions, decisions...

So I just finished reading the sequel to Freakonomics, Super Freakonomics, and I sincerely recommend the book for anyone interested in economics and/or human nature. The book reminds me of my old love of microeconomics and the basic question of how people make decisions.

For those who didn't spend time in the business school, macroeconomics is the field that predicts what interest rates are going to do, where the stock market is going, the business cycle, etc. I'm not really very good at that. Sure I can probably fake it ok, and I got through my classes, but a lot of it seemed rather disconnected with reality and based on a lot of shaky assumptions.

Microeconomics, on the other hand, is simpler. How do we make decisions. You need a new car - how do you decide which one? Basic analysis would assume you have perfect information about every price of every car at every place, but we all know that's not the case. So a more advanced analysis of how much you know, how much you need to know, when you need to know it, how badly you need the car, etc. comes into play. This happens every day with almost every decision - whether which fruit to buy in the store or to move across the country for a new job.

Fascinating.