There was an interesting article on New York Times today on "encouraging more reality in economics". It is based on a speech given by George A. Akerlof, current president of American Economic Association (AEA), during AEA's recent annual meet in Chicago. Akerlof, who won Nobel Prize in 2001 for his work in imperfect information, has been advocating that in real life people's behavior don't replicate the existing economic dogmas (he has been critical of Milton Friedman's theory of inflation and unemployment).
excerpt:
For example, he says, people don’t automatically insist on raises that keep their pay on par with inflation. They often are happy with smaller raises, considering them a compliment from the boss for valued work. That makes pressure for higher pay less inflationary than the Friedman approach would assume. A result, Mr. Akerlof says, is misleading theory and misguided policy.
link
http://www.nytimes.com/2007/01/06/business/06econ.html?pagewanted=1&ei=5087%0A&em&en=b7e7bb0720fe89d6&ex=1168318800
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