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Hello, and thanks for downloading the more or less podcast, with a program that looks at the numbers in the news and in life, and speaks to legends of behavioural economics. I'm Tim Harford.

Once upon a time, economics was a simpler kind of game. Human beings were said to be rational beings, optimising their way through life, a wealth

maximising version of Star Trek's Mr Spock.

That made them much easier to describe in mathematical models, and who

knows? Maybe it was basically true. But what if humans are less Spock and more Homer Simpson,

silly, impatient, weak-willed, and easily confused? That was the argument of a few iconoclastic

economists who in the 1980s made this argument, based on results from experimental psychology, along with a big old dose of looking around at real people.

And if these rebel thinkers, the behavioural economists were right, wasn't that kind of important for how economists did their work and how

public policy should be conducted? 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 Winners Curse, first

published in 1992. His work also won him the Nobel

Memorial Prize in Economics in 2017. More than 30 years on, he's returned to that book,

publishing a new, updated version with co-author Alex O. Emus, which looks at whether those

anomalies in rational thinking have stood the test of time.

I'm joined in the studio by Richard Thaler. Hello, Richard.

Hello, Tim. It's so nice to see you. It's good to see you as well. We should start by exploring some of these ideas.

Maybe the book title, The Winner's Curse. What is the winner's Curse?

The winner's Curse is the following.

Suppose you have an auction.

Imagine, here's the way we do this in a classroom experiment.

We fill up a jar of jelly beans.

...