Self-interest Leads to Bad Outcomes

Economics used to be called the “dismal science” because of the pessimistic predictions of some 19th-century economists concerning the inevitability of mass starvation. Economists’ present day use of prisoners’ dilemma to model different real-life situations perhaps shows that economists are still obsessed with predicting doom. The topic of the next chapter, adverse selection, provides yet more evidence of economists’ tendency to focus on the dark side of capitalism.