Self Improvement

Nick Kokonas and Richard Thaler, Nobel Prize Laureate — Real looking Economics, Avoiding The Winner’s Curse, Utilizing Temptation Bundling, and Going Towards the Institution (#830)

October 14, 2025
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Richard H. Thaler (@r_thaler) is the 2017 recipient of the Nobel Memorial Prize in Financial Sciences for his contributions to behavioral economics and the Charles R. Walgreen Distinguished Service Professor of Behavioral Science and Economics on the College of Chicago Sales space College of Enterprise. He’s additionally a founding principal at FullerThaler Asset Administration, which makes use of behavioral finance to handle over $30 billion in small-cap US equities. 

Thaler has been knowledgeable disrupter. He helped create the fields of behavioral economics and finance that lie within the hole between economics and psychology. He investigates the implications of stress-free the usual financial assumption that everybody within the economic system is rational and egocentric, as an alternative entertaining the likelihood that a few of the brokers within the economic system are generally human. 

Thaler is the New York Instances bestselling coauthor of Nudge: Bettering Selections About Well being, Wealth, and Happiness (with Cass R. Sunstein) and the writer of Misbehaving: The Making of Behavioral Economics. His new guide is The Winner’s Curse: Behavioral Economics Anomalies, Then and Now, co-authored with economist Alex O. Imas. 

My co-host is Nick Kokonas (@nickkokonas), an entrepreneur, investor, and writer greatest often called the co-founder of The Alinea Group (bought, 2024) and the reservation platform Tock (now owned by American Categorical). After revolutionizing how eating places and experiences are crafted, booked, and managed, he’s now centered on artistic ventures that mix enterprise, know-how, and artwork—from immersive theater tasks to Napa Valley winemaking. A philosophy graduate of Colgate College, he’s as eager about concepts and first rules as he’s in constructing issues that final. He lives in Chicago and Napa Valley along with his spouse and two sons.

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Nick Kokonas and Richard Thaler, Nobel Prize Laureate — Real looking Economics, Avoiding The Winner’s Curse, Utilizing Temptation Bundling, and Going Towards the Institution

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SHOW NOTES & LINKS

Transcripts

SELECTED LINKS FROM THE EPISODE

  • Join with Richard Thaler:

College of Chicago Sales space College of Enterprise | Twitter

  • Join with Nick Kokonas:

Twitter | Instagram | Fb

  • Nick’s prior appearances on the podcast:

Books and Articles

Ideas

Related Analysis and Sources

Folks

Universities

Firms and Organizations

Motion pictures

SHOW NOTES

  • [00:00:00] Begin.
  • [00:02:33] First rules: What’s economics, actually?
  • [00:04:18] The “max” assumption and brokers as optimizers.
  • [00:06:41] Rationality in fashions: Fixing issues like an economist would.
  • [00:07:29] “Meh” vs “Max” — shortcuts as an alternative of optimization.
  • [00:08:06] Selfishness, equity, and self-control in financial fashions.
  • [00:10:08] Milton Friedman’s “as if” protection.
  • [00:12:36] The cashew nuts story: Origin of behavioral economics.
  • [00:14:02] Eradicating selection and established order bias.
  • [00:17:31] The case for Individuals needing compelled financial savings.
  • [00:19:34] Educational resistance: Psychologists laughing at financial concept.
  • [00:24:37] Loss aversion: Illness treatment experiment.
  • [00:27:04] Endowment impact: Espresso mug experiment.
  • [00:29:45] Restaurant reservations and the facility of deposits.
  • [00:31:05] Equity analysis: Snow shovels and blizzards.
  • [00:32:50] Uber surge pricing and the 9/11 thought experiment.
  • [00:34:37] Behavioral economics in a single sentence.
  • [00:35:00] Nudges: 401(okay) auto-enrollment case research.
  • [00:37:46] The fly within the urinal and nudge sturdiness.
  • [00:39:07] Lakeshore Drive strains: Making security simple.
  • [00:41:30] Alternative structure: Good nudges vs. malicious nudges.
  • [00:42:40] On-line playing and Robinhood’s gamification.
  • [00:45:51] Classes discovered from educating decision-making for 40 years.
  • [00:46:52] Winner’s curse: The jar of cash demonstration.
  • [00:49:04] ARCO engineers uncover the winner’s curse in oil bidding.
  • [00:50:11] Writing papers as aggressive technique.
  • [00:52:31] Amos Tversky’s be aware: Folks study by means of tales.
  • [00:53:44] Overconfidence: Amazon River and CFO predictions.
  • [00:55:59] NFL draft: 53% success charge (barely higher than coin flips).
  • [00:57:12] Buying and selling down within the draft as optimum technique.
  • [00:59:26] Making use of behavioral insights to every day habits.
  • [01:01:04] The regulation of 1 worth and restaurant deposit resistance.
  • [01:02:39] Being a chef doesn’t routinely make you businessperson.
  • [01:03:33] Sports activities analytics: The three-point shot revolution.
  • [01:04:29] Michael Jordan vs Steve Kerr: 50% three-point taking pictures.
  • [01:05:56] Discovering $20 payments on the road.
  • [01:06:35] Psychological accounting: Cash in denims seems like a windfall.
  • [01:07:50] Obama stimulus: Lump sum vs. unfold out funds — why does it matter?
  • [01:09:58] Airline baggage charges: “There’s a man who owns that.”
  • [01:11:43] Sunk value fallacy: The dessert we don’t want.
  • [01:12:37] Nick’s $500 wine instance and constructing Tock on sunk prices.
  • [01:14:41] Richard’s daughter and the baseball/live performance tickets experiment.
  • [01:16:05] Temptation bundling: Utilizing cognitive biases for self-improvement.
  • [01:19:06] Huge information and pure experiments in the actual world.
  • [01:19:50] Psychological accounting in motion: Premium gasoline in the course of the monetary disaster.
  • [01:22:34] Amazon’s hundred-PhD economics division.
  • [01:23:48] The pragmatic motive Richard invented behavioral economics.
  • [01:25:47] Technique: Corrupt the youth, not change previous minds.
  • [01:27:06] The behavioral economics summer season camp operating since 1994.
  • [01:28:12] The “Anomalies” column in Journal of Financial Views.
  • [01:29:44] Citations matter: Writing articles individuals can perceive.
  • [01:30:31] Availability bias: Homicides vs. suicides.
  • [01:31:47] Kahneman and Tversky: The rationale for every little thing.
  • [01:33:11] Systematic bias vs. random errors.
  • [01:34:08] Amos’ dinner entice: Everybody you already know is dumb, besides your fashions.
  • [01:37:19] Michael Lewis’ The Undoing Undertaking.
  • [01:38:11] Daniel Kahneman’s assisted suicide choice as peak-end rule utilized to life itself.
  • [01:45:11] What retains Richard going?
  • [01:46:44] Why the up to date model of The Winner’s Curse ought to enchantment to economists and on a regular basis people.
  • [01:49:58] Parting ideas.

RICHARD THALER QUOTES FROM THE INTERVIEW

“Economics is admittedly two issues. It’s individuals interacting in markets, after which what are these individuals doing? And what occurred is someday proper after World Struggle II, economists began getting eager about making their fashions extra rigorous and extra mathematical. And the simplest mannequin to jot down down of what any person’s doing is to jot down down a mannequin through which they’re doing it completely.”

— Richard Thaler

“My joke is, as an alternative of writing down ‘Max,’ suppose we wrote down ‘Meh,’ as a result of what individuals are doing isn’t actually max, proper? It’s ‘I’ll do one thing.’ The place I are available on that a part of the story is, ‘Okay, if individuals are not succesful or eager about fixing they usually’re doing one thing else, taking some shortcut, then what?’ In order that’s precept primary.”

— Richard Thaler

“You’re a fairly good golfer. I’m a mediocre golfer. Neither of us play like Tiger Woods. So, although you’re a fairly good golfer, we wouldn’t wish to predict the best way you’re going to hit a shot by saying, ‘What would Tiger do?’”

— Richard Thaler

“I believe the necessary lesson is that, if you happen to’re doing enterprise in the actual world and you’ve got clients and staff which might be individuals, not brokers, then you need to do issues a bit otherwise. And that’s the one-sentence abstract of behavioral economics.”

— Richard Thaler

“What do they keep in mind? They keep in mind tales. That’s the solely factor individuals keep in mind. They don’t keep in mind a method. They don’t keep in mind some summary idea. They keep in mind a narrative or they keep in mind an illustration.”

— Richard Thaler

“I used to be not one of the best grad scholar in my class and I wasn’t in one of the best division. I imply, really I wasn’t an incredible scholar in any method, however I actually knew I used to be not one of the best grad scholar in my class. … I kind of needed to invent behavioral economics to have a profession, in any other case I might’ve performed one thing else.”

— Richard Thaler

“Sarcasm doesn’t actually persuade individuals. … The technique I adopted to broaden the sector, I at all times say, as an alternative of fixing individuals’s minds, I might corrupt the youth.”

— Richard Thaler

“I don’t actually suppose individuals are dumb. I believe the world is tough. However individuals cope with this tough world utilizing shortcuts and so forth, and the shortcuts are helpful however not good, they usually result in predictable errors.”

— Richard Thaler

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Need to hear one other episode with somebody who understands uneven threat and making daring selections throughout uncertainty? Take heed to my final dialog with none aside from Nick Kokonas, through which we mentioned how he pivoted his Michelin three-star eating places in the course of the COVID-19 disaster, creating Tock To Go in days as an alternative of months, the three-shoebox enterprise mannequin his father taught him, why shopping for right now’s meals with tomorrow’s income is a entice, uneven risk-taking alternatives, the significance of getting pores and skin within the sport, his floor-trading expertise informing disaster technique, and rather more.



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