People exaggerate their own skills. they are optimistic about their prospects and overconfident about their guesses, including which managers to pick.

The reason is they failed to learned the primary lesson we should have learned from when Long Term Capital Management went belly up ten years ago. That is, investments that seem uncorrelated can be correlated simply because we're interested in it.

So, what's a nudge? A nudge is some small feature of the environment that attracts our attention and alters our behavior.

he card companies will often, as a courtesy, honor that credit card, but hit you with a penalty. And you keep swiping your card for $3 at Starbucks for your latté, and you're getting hit with a $25 penalty because it's over your credit limit.

I'm all for empowerment and education, but the empirical evidence is that it doesn't work. That's why I say make it easy.

Credit cards have been extremely profitable to banks. They're profitable not from the fees they collect from the retailers that use the credit cards, that pays the bills, but the real profits come from the interest payments and the charges to users that are unexpected.

I think one lesson we have to learn is that there's a lot more risk than we're giving credit to, a lot more what economist calls systematic risk.