There is also some paradox in cognition change that works even when the

manipulated person knows he is being manipulated. This creates a sort of paradox

in a paradox, but, again, so what. I once much enjoyed an occasion of this sort.

I drew this beautiful woman as my dinner partner many years ago. I’d never seen

her before. She was married to a prominent Los Angeles man. She sat down next to

me, turned her beautiful face up, and said, “Charlie, what one word accounts for

your remark- able success in life?” I knew I was being manipulated by a

practiced routine, and I just loved it. I never see this woman without a little

lift in my spirits. And, by the way, I told her I was rational. You’ll have to

judge yourself whether that’s true. I may be demonstrating some psychological

tendency I hadn’t planned on demonstrating.

 

My fifth question is: Don’t we need more reconciliation of psychology and

economics?

 

My answer is yes, and I suspect that some slight progress is being made. I have

heard of one such example. Colin Camerer of Caltech, who works in “experimental

economics,” devised an interesting experiment in which he caused high I.Q.

students, playing for real money, to pay price A+B for a “security” they knew

would turn into A dollars at the end of the day. This foolish action occurred

because the students were allowed to trade with each other in a liquid market

for the security. And some students then paid price A+B because they hoped to

unload on other students at a higher price before the day was over. What I will

now confidently predict is that, despite Camerer’s experimental outcome, most