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LUMS’ Mark Shackleton interviews Nobel Laureate Robert Shiller

Robert Shiller and Mark Shackleton

17 March 2016

Professor Mark Shackleton was selected to interview American Nobel Laureate Professor Robert Shiller on the opening day of Surrey University’s Global Student Summit this week.

Mark, who in 2013 published “Mitigating financial fragility with continuous workout mortgages” with Robert Shiller, Rafal Wojakowski and Shahid Ebrahim, put questions to the economist, academic and best-selling author before opening questions to the floor.

At the talk, on the first day of the annual, three-day Global Student Summit (an event which is organised by the Surrey Economics and Finance Society), Robert Shiller discussed his latest book "Phishing for Phools: The Economics of Manipulation and Deception", co-authored with George Akerlof, which describes the idea that market participants are always balancing between useful product-oriented energy and unproductive effort that is purely aimed at tricking customers into behaviour that would otherwise be irrational.

Apart from finance, examples include selling sugary, fatty and other unhealthy foods, particularly at airports, checkouts or other places where time and stress pressures are raised. Rather than presenting a moral case, Bob describes this as a competitive equilibrium where those who abstain from such practises lose market share to those who do.

This psychological “phishing” complements the so-called informational “phishing“ described by George Akerlof (in his work “The Market for Lemons”, i.e. bad or second hand goods).

With the increased availability of mass data, Professor Shackleton asked his co-author whether the internet had exacerbated phishing pressure and also took a straw poll from the audience as to those who admitted to being phished.

Rather than mandate or legislate against such products and practices, Robert Shiller was keen to advocate industry-led solutions with businesses nominating the referees that would be best positioned to monitor the game. He also named several historical unknown figures such as Harvey Washington Wiley, founder of the US Food and Drug Administration, who in their time contributed to significant advances in consumer legislation.

Robert Shiller is ranked among the 100 most influential economists in the world and jointly received the 2013 Nobel Memorial Prize in Economic Sciences with Eugene Fama and Lars Peter Hansen “for their empirical analysis of asset prices”.

Speaking after the event, Professor Shackleton said: “It is a great privilege to work with someone of Bob’s standing. I am always impressed by how such an eminent leader in my field can return to such simple but far reaching and important topics."