More or Less Richard Thaler and The Winner’s Curse
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Nov 29, 2025 
Join Richard Thaler, a Nobel laureate and pioneer of behavioral economics, as he delves into the fascinating world of decision-making anomalies. He explains the winner's curse through an engaging jelly bean auction experiment, revealing how auction winners often overestimate value. Thaler also discusses mental accounting, illustrating how we categorize money into budgets and how it influences our spending choices. With humor and insight, he shares real-world examples, reaffirming the importance of behavioral economics in understanding human behavior.
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Why Winning Can Be A Curse
- The winner's curse happens because the highest bid likely reflects an overestimate of value.
- Winning an auction therefore predicts receiving less value than the winner expected.
Oil Company Discovery Of The Curse
- Engineers at Atlantic Richfield found winning oil leases produced less oil than expected.
- They realised winners had overestimated value, illustrating the winner's curse in practice.
Money Is Not Fungible In Practice
- People mentally label money into accounts instead of treating all money as identical.
- These mental accounts change spending choices, like splurging from a 'gasoline' windfall.
