The Good Fight Richard Thaler on Why People are Much More Irrational than Economists Believe
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Dec 7, 2025 
In this discussion, Richard Thaler, a Nobel laureate and pioneering behavioral economist, shares insights into human irrationality and its implications for economics. He unpacks the concept of nudge theory, explaining how subtle shifts in choice architecture can lead to better decision-making. The conversation delves into topics like the winner's curse in auctions, the role of fairness in games, and the ethical dimensions of nudging. Thaler also explores the potential of AI, like ChatGPT, to assist in personal decision-making while cautioning against its pitfalls.
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Economic Models Are Norms Not Descriptions
- Economics models assume agents maximally solve problems, not people.
- Those models work as normative guides but fail descriptively for typical human decision-making.
Cashews Revealed Temptation
- Richard Thaler hid a bowl of cashews at a dinner of economists and everyone thanked him.
- The guests admitted the removed choice made them better off, revealing real people dislike tempting choices.
Heuristics Produce Predictable Biases
- Kahneman and Tversky showed people use heuristics that systematically deviate from rational models.
- These predictable biases created a path for behavioral economics to challenge standard assumptions.
