Knowing and Making

John Kay's new book Obliquity: Why our goals are best achieved indirectly  (whose launch at the IPA was hosted last night by Rory Sutherland) follows in the tradition of a number of recent books about decision-making and rationality. Indeed, he mentions Predictably Irrational  and Blink in the first ten pages. It goes beyond them in a couple of interesting ways, but leaves some questions - perhaps deliberately - unanswered. One of my favourite books on business is also by John Kay:  The Hare and the Tortoise: An Informal Guide to Business Strategy . I'd recommend it to anyone involved in guiding the strategy of their firm. You need only read a few pages to appreciate the wisdom and insight of the author, and so I have been looking forward to reading this new book. Kay's definition of obliquity can be summarised as: Aim for diverse goals other than your direct objective. The companies that make the most money are not those whose primary goal is to make money. Accep...

Lots of behavioural finance conversations going on on the blogs today and yesterday. Chris Dillow of Stumbling and Mumbing replies to my proposal for governments to take into account cognitive bias while regulating. Simon Johnson of Baseline Scenario responds to a debate between Richard Thaler and Richard Posner about financial regulation. Alex Tabarrok from Marginal Revolution highlights the difficulty of fighting asset bubbles , even if you have overcome the challenge of identifying them . Kenneth Arrow (via Conor Clarke of The Atlantic) argues that behavioural economics doesn't predict anything . Update : A friend points out this letter in the FT from John Maule calling for behavioural approaches to be used more in regulation and investment decisions. I'd love to have time to engage in depth with all of these debates, but let me start with a couple of key points. Commenters on both Chris's and Simon's posts use a familiar argument to dissent from the idea of beh...