Once we start thinking of ourselves as polluted, there is not much incentive to behave well, and the trip down the slippery slope is likely.

Who would you trust right now? Which bank would you trust? Which investment would you trust? Do you really want to put your money; do you want to suffer more of these losses that we just had? You know, these volatility that we see is just unexplainable by any rational standards. Nobody has any clue about how to explain this, and nobody wants to experience that. So, we hold more money back, we don't necessarily want to invest in the market and by default, people are saving more.

One of the big lessons from behavioral economics is that we make decisions as a function of the environment that we're in.

Imagine you have six loans, small to huge. People want to close loans and because of that, they try to pay off the small loans, but that's not the right strategy. The right strategy, of course, is to pay the loan with the highest interest rate. People make this mistake and it costs them lots and lots of money, it's a very expensive mistake because interest rates accumulate and become very, very expensive very quickly.

What people do is they pay the small loans first. Why? Because they enjoy making the number of loans smaller. But of course it is a very ineffective way to pay debt down.

The experiments show quite clearly that, as you resist more and more temptation, you're actually more and more likely to fail.

Money is a wonderful invention. It lets us save, it lets us specialize, right? I couldn't be a professor if there wasn't any money. Every day I would have to raise chicken and bread and broccoli and go ahead and spend all my time trading. So, money is a wonderful mechanism.