Richard Thaler and The Winner’s Curse

The "More or Less" podcast, hosted by Tim Harford, features an interview with Nobel laureate Richard Thaler, co-author of "The Winner's Curse." They discuss the origins and implications of behavioral economics, contrasting traditional economic assumptions of rational human behavior with real-world observations of "silly, impatient, weak-willed and easily confused" individuals. Thaler explains concepts like "The Winner's Curse" using examples from classroom experiments with jelly beans and oil company auctions, and delves into "mental accounting," illustrating how people categorize and treat money differently despite its fungible nature. The discussion highlights how these anomalies, initially observed in lab experiments, are now validated by large-scale real-world data.