The BIG Mistake of Monsters Inc

By now, most of us know the end of Monsters Inc. The Monsters discover that the screams they've been using as a power source are not the most optimized way to do business. Which, you know, is good to find out given the terror they've been puting generations of kids through. Thanks to the adventures of Sully, Mike and Boo, they find out laughter works even BETTER than the sreams. What I want to know, Theorists, is WHY that is and, more importantly, did the Monsters actually make a big MISTAKE?