The Market Forcers Don't Always Impinge on Those Small Decisions

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When a real estate agent is selling a house that she herself owns, it's her her name's on the title verse. When she's representing a client and is going to get a commission - if she charges an extra 25 thousands dollars for the house, she gets the whole 25 thousand. If she sells the client's house for an extra 25 thousand, she only gets the commission of that, which is quite small. So your argument is that there's a a attention mis alignment of incentives, where the agent wants to set a lower price for the house than the owner when it's she'srepresenting a client. Ive never liked it because, in my view, people are relatively rational

Author and economist Steven Levitt is the William B. Ogden Distinguished Service Professor of Economics at the University of Chicago and host of the podcast "People I (Mostly) Admire." He is best known as the co-author, with Stephen Dubner, of Freakonomics. The book, published in 2005, became a phenomenon, selling more than 5 million copies in 40 languages. Levitt talks with EconTalk host Russ Roberts about the book's surprising success, the controversy it generated, and how it shaped his career. Levitt says, for him, "economics is about going into the world and finding puzzles and thinking about how understanding incentives or markets might help us get a better grasp of what's really going on."