How Investors Fall Into Bias Traps with Economists Richard Thaler & Alex Imas

Richard Thaler and Alex Imas discuss behavioral economics, its evolution, and its impact on finance and decision-making. Thaler recounts his early interest in psychology and the development of behavioral economics as a response to the unrealistic models of traditional economics. The conversation explores anomalies like the disposition effect, limited attention, and home bias, demonstrating how individuals and even institutional investors make irrational decisions. Thaler and Imas also address the reproducibility of behavioral economics findings and the challenges of overcoming biases, even with increased awareness. They critique the gamification of investing and advocate for choice architecture and greater humility in financial decision-making.