The bad news is that ignoring the performance of people is almost as bad as shredding their effort in front of their eyes. Ignoring gets you a whole way out there. The good news is that by simply looking at something that somebody has done, scanning it and saying "Uh huh," that seems to be quite sufficient to dramatically improve people's motivations.

One percent of people will always be honest and never steal," the locksmith said. "Another one percent will always be dishonest and always try to pick your lock and steal your television. And the rest will be honest as long as the conditions are right - but if they are tempted enough, they'll be dishonest too. Locks won't protect you from the thieves, who can get in your house if they really want to. They will only protect you from the mostly honest people who might be tempted to try your door if it had no lock".

With money we really fool ourselves. We are our biggest enemies with money and there are some things we can do about it. Automatic deductions are a wonderful thing. But ideally, you should wait until the end of the month, you can see how much extra money you had, and you should put that in your savings account. We don't do that too well, and if we did that, we would never save. So, what we do, is we take money out of our pocket into the saving account at the beginning of the month, take it outside of our control and as a consequence, we spend less and we save more.

We are all far less rational in our decision-making than standard economic theory assumes. Our irrational behaviors are neither random nor senseless: they are systematic and predictable. We all make the same types of mistakes over and over, because of the basic wiring of our brains.

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.

The problem with opportunity cost is that opportunity cost is divided among many, many things.

We have very strong intuitions about all kinds of things — our own ability, how the economy works, how we should pay school teachers. But unless we start testing those intuitions, we’re not going to do better.