Re: Part 2: Heuristics and Biases
Yes, your sentiment makes sense. Denise Cummings, above, made much the same point.
Kahneman (and Tversky) had a complex relationship with the real world. Much of the attention received by their work was because they successfully challenged the prevailing methodology in economics by showing that people do not, in fact, generally behave as fully-informed rational agents. In fact there are systematic biases to people's sub-rational behavior, and in this book Kahneman made a good case that those are generally due to the effect of heuristics.
Interestingly, their research also showed that people quickly adapt to incentives and give up heuristic biases if substantial amounts of money are involved. That is, "professionals" in a market don't fall for the heuristic errors over and over on any substantial scale. So in fact, standard economics provides a good model of behavior in markets dominated by professionals.
Where their "behavioral economics" needs to be better applied is in providing safeguards so that professionals don't have an incentive to systematically rip off the casual participants in the market, like consumers of medical care or housing.