Capitalisn't Nobel Economist Reveals Why Economic Models Keep Failing Us, ft. Richard Thaler
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Oct 30, 2025 
Richard Thaler, a Nobel Prize-winning economist and co-author of The Winner's Curse, dives deep into the quirks of human behavior that challenge traditional economic theory. He discusses how behavioral economics helps explain why people often make irrational decisions, from personal finance to tech addiction. Thaler emphasizes the significance of modest policy nudges to improve outcomes, sharing real-world successes like automatic retirement enrollment. He also explores the cultural robustness of behavioral findings and the tension between academia and Silicon Valley's rapid adoption of these insights.
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Build Models Around Real Behavior
- Enrich economic models to incorporate observable human departures from idealized rationality.
- Use empirical data to test robustness and adjust policy-relevant predictions accordingly.
The $20 Bill Job-Interview Story
- During a job interview walk, Thaler found a $20 bill and was the only one to pick it up.
- He used the story to show that economists' models don't always predict real human actions.
Favor Pragmatic, Feasible Nudges
- Push modest, implementable policy nudges rather than sweeping mandates that won't pass.
- Aim for politically feasible changes like automatic enrollment or easy subscription cancellation.
