One simple problem is the overload of information, which forces people to choose what information they want to take in. This may be an impossible problem to solve rationally. Modern game theory also shows how it may be rational to be irrational, although as the construction of this sentence immediately suggests, this runs us into deep philosophical paradoxes.

There are also some deep reasons for malfunctions in an economy that are related to language. It is, for instance, arguable that reality and possible states of the world are more finely grained (they may even be a continuum) than language is able to capture. Since the coarseness of language or our conception of the world may be different depending on the person or the language, this can give rise to inefficiencies and market failures. Suppose, for example, that no language is able to describe or has words for all the integers. One language has words only for pairs like ... {1, 2}, {3, 4}, {5, 6} ..., whereas another language has words for pairs like ... {0, 1}, {2, 3}, {4, 5} and so on. Misunderstandings among people belonging to these two different language groups trying to converse and coordinate their behavior can lead to market failures and crashes.<sup>16</sup> This can be unintended, although it is also possible for some to take advantage of the fact that we have no language to describe fully all worlds.

As I said earlier, there are parts of the book where I would have preferred that the authors had resorted to some formalization and algebra. This may need a little explanation, since economists are usually criticized for over‐formalization and the use of mathematics for the sake of using mathematics. Although this criticism may be fair, formalization is often a disciplining device that compels researchers to confront questions that they otherwise would gloss over, and leads them to other important questions and puzzles. It is for these reasons that it would have been worthwhile for the authors to resort to methods of formal modeling at least in a few places, of the kind that both authors have used in their earlier papers and books. By drawing attention to the flaws in mainstream economics that give rise to complacency, to a feeling that all is well, it also creates the space for policies and interventions for a better and fairer world. Behavioral economics has given us numerous ideas for doing so,<sup>17</sup> but there is ample scope for doing more.

The problems that the book talks about have been with us from ancient history, when some groups conquered or cajoled and duped other groups into submission and exploitation. The book rightly points out that such behavior is not the exception but part of life. But this raises the

> 16 While the point being made here is a broad philosophical claim, there are some analyses in economics that illustrate this problem in special situations. See, for instance, Rubinstein (1989) and Morris and Shin (1998).

> 17 We know now that a small change in the college application process can have a large impact on the quality of the colleges that students from low‐income families  actually attend, which substantially increases their projected lifetime average income (Pallais, 2015); we have learned how, through some simple cues, we can curb excessive payday borrowing (Banerjee and Duflo, 2011; Bertrand and Morse, 2011); we have learned a lot about the analytics of commitment savings, which can have a large impact on human welfare (Thaler and Benartzi 2004; Karna Basu 2014); and we know how in certain situations we can improve road safety by encouraging passengers to speak up (Habyarimana and Jack, 2011). World Bank (2015) provides many more examples of the uses of this kind of knowledge in enhancing human welfare.

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