Behind the Money The Economics Show: What economics gets wrong about human behaviour, with Richard Thaler
9 snips
Dec 24, 2025 
Richard Thaler, a Nobel Prize-winning economist and a pioneer in behavioral economics, discusses the quirky ways humans make decisions. He emphasizes how traditional economic models fail to account for irrational behavior, like sunk-cost fallacies, using humorous anecdotes about concert tickets. Thaler introduces the ultimatum game, highlighting that fairness often trumps greed. He explains how simple nudges, like automatic enrollment in pension plans, can lead to better financial outcomes, transforming our understanding of economic behavior.
AI Snips
Chapters
Transcript
Episode notes
Homo Economicus Remains A Useful Model
- Homo economicus is still taught as a useful simplifying model but fails to capture real human behaviour often.
- Economists should teach the rational model and also when humans systematically deviate from it.
Sunk Costs Keep Bad Projects Alive
- Thaler gives the concert-ticket and Concorde examples to show sunk-cost behaviour in real life.
- People keep projects going because of past investments, not because future returns justify them.
Teach Models And Their Limits
- When teaching economics, present the rational model but also teach empirical deviations so students can predict behaviour.
- Use both models to guide business and policy decisions, assuming others may not ignore sunk costs.