In the later part of the 20th century, a pioneering group of economists started shaking up their academic field.
These “behavioural economists” used findings from experimental psychology and everyday life to challenge the prevailing view that human beings were rational decision makers – acting in predictable ways to maximize their wealth.
One of those pioneers was Richard Thaler, who noted down some of these “anomalies” in a column in the 1980s, which was turned into a book - The Winner’s Curse - first published in 1992. His work also won him the Nobel memorial prize in economics in 2017.
More than 30 years on, he has returned to that book, publishing a new, updated version with co-author Alex Imas, which looks at whether those anomalies in rational thinking have stood the test of time.
Tim asks him to set out two of his most famous ideas – the winner’s curse itself, and the idea of “mental accounting”.
Presenter: Tim Harford Series producer: Tom Colls Sound mix: Donald MacDonald Editor: Richard Vadon