You Are Not So Smart 309 - They Thought We Were Ridiculous - Andy Luttrell (rebroadcast)
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Mar 17, 2025 Andy Luttrell, a social psychologist and host of the Opinion Science podcast, dives into the revolutionary work of Daniel Kahneman and Amos Tversky. They discuss how cognitive biases, such as the famous Linda problem, challenge conventional economic rationality. Luttrell explores the birth of behavioral economics, highlighting key concepts like bounded rationality and prospect theory. The importance of precise questioning in understanding decision-making is emphasized, revealing how our perceptions shape reality and necessitating a shift in our understanding of rationality.
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Blizzard and Basketball Tickets
- Richard Thaler noticed people making irrational decisions, like choosing not to drive to a basketball game in a blizzard because the tickets were free.
- His friend said they would have gone if they had paid for the tickets, highlighting how perceived value influences decisions.
The Cashew Conundrum
- Thaler noticed guests at a party were happy he removed a bowl of cashews to avoid spoiling dinner.
- Economically, this is odd, as more choices are generally preferred to fewer.
Rationality vs. Reality
- Economists often point out people's irrational economic decisions.
- However, their models assume everyone is rational, creating a contradiction.
