The Brainy Business | Understanding the Psychology of Why People Buy | Behavioral Economics 543. The Winner's Curse
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Oct 23, 2025 
This discussion features Dr. Richard Thaler, a Nobel Prize winner and behavioral economics pioneer, alongside Dr. Alex Imas, a professor known for his research on attention and uncertainty. They dive into the intricacies of decision-making, highlighting how bidders often overpay in auctions due to the winner’s curse. The conversation reveals fascinating insights about mental accounting and its real-world effects in finance. They also explore the role of AI in shaping consumer behavior and the importance of long-term trust in business relationships.
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Behavioral Economics Defined
- Behavioral economics blends psychology with economics by documenting systematic departures from the standard rational model.
- It focuses on market-relevant questions like consumer and producer interactions rather than pure psychology tasks.
How The Winner's Curse Began
- Richard proposed a quarterly anomalies column for the Journal of Economic Perspectives in 1987 and later compiled 14 pieces into a book.
- That collection became the original Winner's Curse published in 1992.
Robustness Through Big Data
- Large-scale real-world datasets have validated many early lab findings in behavioral economics.
- Thaler and Imas emphasize replications and provide materials showing strong robustness in the field.
