Perhaps the most widely admired of all the economic theories taught in our universities is the notion that an unregulated competitive economy is optimal for everyone.

In this optimal economy, each person is said to be a free actor who makes decisions purely in his or her own self-interest. Economists on both the right and left commonly say that these fundamental ideas tie our values of freedom and individuality to the success of our economies.

The problem is that these ideas are flawed. Along with George A. Akerlof, university professor at Georgetown and a fellow Nobel laureate in economic science, I have used behavioral economics to plumb the soundness of these notions.

In our book, “Phishing for Phools: The Economics of Manipulation and Deception” (Princeton, 2015), we question the all-commanding relevance of the free-market theory to our actual lives and economies. While we confirm the importance of free markets, we have found that market regulation has been crucial, and believe that will continue to be true in the future.