Challenging Economic Decision-making Norms

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Anomalies in people's decisions challenged the conventional economic wisdom of rational decision-making. A decision to not risk driving in a blizzard, despite having paid for tickets, and coping with a camping trip in extreme heat rather than canceling it, demonstrated how individuals deviated from standard economic expectations. These anomalies collected by the professor highlighted scenarios where people acted differently from what traditional economics would predict.

In 1974, two psychologists, Daniel Kahneman and Amos Tversky, as the New Yorker once put it, "changed the way we think about the way we think." The prevailing wisdom, before their landmark research went viral (in the way things went viral in the 1970s), was that human beings were, for the most part, rational optimizers always making the kinds of judgments and decisions that best maximized the potential of the outcomes under their control. This was especially true in economics at the time. The story of how they generated a paradigm shift so powerful that it reached far outside economics and psychology to change the way all of us see ourselves is a fascinating tale, one that required the invention of something this episode is all about: The Psychology of Single Questions.

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