Imas explains that later research moved beyond low-stakes experiments with students and found similar anomalies among sophisticated market participants. Thaler attributes the durability partly to selecting large effects that had already appeared across several papers.

Original studies often used students and low stakes
Later work found similar effects among institutional investors and other experts
Large effect sizes and prior evidence improved replication
The authors found little in the original book that aged poorly

“All of these anomalies, as you mentioned, replicate in some of the most sophisticated economic participants out there”
Alex Imas · 10:49

“I was picking something with a very big effect size and topics. There had already been several papers.”
Richard Thaler · 12:18

#replication#market participants#research methods

Hot Take· 3

Hot Take29:47

NFL Teams Massively Overvalue Early Draft Picks

Thaler's NFL research found that teams pay too much for early draft selections and obtain better value in the second round. Trading a current second-round pick for a first-round pick next year also implies an extraordinary discount rate driven by owners' desire to win immediately.

A conventional chart shaped the market for trading draft picks
Early selections were massively overvalued
Second-round picks offered stronger value
Present picks were valued as though future picks were discounted at 137 percent

“the early picks are massively overvalued.”
Richard Thaler · 30:43

“We calculated that's a discount rate of one hundred and thirty seven percent.”
Richard Thaler · 31:11

#nfl#draft#present bias#valuation

Hot Take37:08

Professional Sports Learns Shockingly Slowly

Thaler points to the slow adoption of three-point shooting, aggressive fourth-down decisions, and baseball's pitch clock. Even when evidence favors change, coaches and institutions resist because unconventional failure makes decision-makers look foolish.

Three-point shots offered superior expected value long before teams exploited them fully
Football teams still punt too often on fourth down
A no-kicking high-school strategy succeeded despite looking unconventional
Reputational fear slows evidence-based experimentation

“What has surprised me is how slowly the learning has taken place”
Richard Thaler · 39:36

“the reason is people don't like to look like fools.”
Richard Thaler · 38:34

#sports#learning#risk aversion#innovation

Hot Take57:56

Zero-Fee Trading Put Behavioral Biases on Steroids

Imas argues that democratized market access did not automatically produce better financial outcomes. Retail users gravitated toward short-dated options with lottery-like payoffs, while platforms profited from the large spreads associated with those instruments.

Mobile platforms removed transaction fees and access barriers
Retail traders concentrated in weekly and single-day options
Lottery-like returns attract predictable behavioral demand
A cited audit estimated billions of dollars in trader losses
Platform incentives favor products with wider spreads

“the same sort of biases that you have that you're documenting them lap that you document in the field, they're on steroids in digital spaces.”
Alex Imas · 58:42

“it's making money off of behavioral biases and people are losing a lot of money on it.”
Alex Imas · 59:04

#robinhood#options#retail trading#fintech

Explainer· 4

Explainer13:15

Why Ownership Can Inflate a Homeowner's Asking Price

Imas describes the endowment effect: randomly receiving an object can make a seller value it more than an otherwise similar buyer does. Subsequent housing research estimated loss aversion from asking prices and produced magnitudes similar to the original laboratory findings.

Ownership can increase perceived value without changing the asset
Early mug experiments found sellers valued goods roughly two and a half times more
Housing-market evidence linked ownership and loss aversion to higher asking prices
Field estimates matched the laboratory magnitude surprisingly closely

“just because I own the mug, I start valuating it more.”
Alex Imas · 14:17

“The number the actual quantitative number in housing markets. This is the crazy part about it matches the number that Richard documented in the lab.”
Alex Imas · 14:53

#endowment effect#housing#loss aversion

Explainer15:29

Why Profit-Maximizing Offers Still Get Rejected

The ultimatum game shows that people will sacrifice money to reject offers they perceive as insulting. In experiments, low offers are frequently rejected, while fairer divisions produce cooperation that narrow self-interest models fail to predict.

One player proposes how to divide a fixed sum
The recipient can reject the offer and leave both players with nothing
Offers below about twenty percent are likely to be rejected
The profit-maximizing offer is around forty percent

“No real world person has ever done that.”
Richard Thaler · 16:52

“if you make insulting offers, they may get rejected. And if you want cooperation, you have to be cooperative.”
Richard Thaler · 17:29

#fairness#cooperation#game theory

Explainer26:00

Why the Rational Answer Can Lose Keynes's Beauty Contest

The beauty-contest game asks participants to guess two-thirds of the group's average. Although repeated rational reasoning drives the equilibrium toward one, real players stop after only a few levels because they must predict how deeply everyone else will reason.

Success depends on beliefs about other participants' beliefs
The formal equilibrium is one when one is the lowest permitted number
Most players perform only one or two rounds of iterative reasoning
A theoretically correct answer can lose against actual human behavior

“it's not that the fundamental value of a stock would determine its price, it's what everybody else thinks the fundamental value is it's all about…”
Alex Imas · 26:09

“No, you would not win guessing one because other people are not guessing one.”
Alex Imas · 27:55

#keynes#game theory#beliefs

Explainer53:20

Why More Information Has Not Made Reasonable People Agree

Auman's agreement theorem assumes conditions that break down when people selectively seek confirming evidence and question opponents' rationality. Digital abundance has therefore enabled different groups to construct incompatible information environments rather than converge on common beliefs.

Agreement requires strong assumptions about rationality and shared beliefs
Confirmation bias changes which evidence people consume
People often interpret disagreement as proof that the other side is irrational
Information providers amplify demand for belief-confirming material

“people have confirmation bias in the real world, right, so they seek out information that confirms their beliefs.”
Alex Imas · 54:10

“they basically end up in completely different worlds thinking that they're rational and somebody else who's not agreeing with them is irrational.”
Alex Imas · 54:18

#confirmation bias#internet#beliefs#polarization

Story· 3

Story02:15

How Thaler's Anomalies Columns Became The Winner's Curse

Thaler explains that the Anomalies feature began as an accessible quarterly column for the American Economic Association's new journal. After nearly four years, the accumulated examples formed the original 1992 edition of The Winner's Curse.

The journal aimed to make economics accessible beyond narrow specialists
An anomalies column examined behavior standard economic assumptions could not explain
Nearly four years of columns became the original book

“An anomaly is something that cannot easily be explained using the standard assumptions that people are really smart, unemotional, selfish, no self control problems, basically…”
Richard Thaler · 03:13

“When it looked like a pile of them looked like a book, I stapled them together and that was the original version of The Winner's…”
Richard Thaler · 03:46

#behavioral economics#publishing#anomalies

Story04:22

Thaler's Strategy for Spreading a Heretical Economic Field

Thaler jokes that he failed to change established economists' minds and instead focused on younger scholars. Alex Imas's career illustrates that diffusion: hearing Thaler discuss Nudge on NPR redirected him from medical school toward behavioral economics.

Behavioral economics initially challenged entrenched professional assumptions
Thaler focused on influencing students and emerging researchers
An NPR interview prompted Imas to pursue an economics PhD

“I didn't change anybody's mind over the course of my career, and after realizing that, I decided instead to have a strategy of corrupting the…”
Richard Thaler · 05:02

“I could take this and combine it with that, and that's amazing.”
Alex Imas · 07:05

#academic careers#behavioral economics#mentorship

Story17:49

The Taxi Driver Who Used Trust Instead of a Contract

A Thai taxi driver declined payment for the outbound trip and trusted Thaler to return after dinner. The unpaid fare aligned both sides' incentives and elicited reciprocal trust without a formal contract.

Both passenger and driver faced a risk of defection
The driver delayed all payment until the return trip
Trust increased the passengers' motivation to keep the arrangement
The informal agreement produced repeat business

“The contract was, he said, don't pay me anything perfect.”
Richard Thaler · 18:48

“He knew that by being trusting he would engender trust”
Richard Thaler · 19:18

#trust#cooperation#contracts

Takeaway· 2

Takeaway32:23

Sports Analytics and Behavioral Economics Study the Same Problem

Thaler connects Moneyball's search for undervalued players with a portfolio manager's search for undervalued stocks. Psychology identifies biased judgment, while economics studies how those biases become embedded in prices and markets.

Billy Beane sought undervalued players under a constrained budget
Portfolio managers similarly seek undervalued securities
Overconfidence in player evaluation is psychological
Mispriced draft picks turn the bias into an economic phenomenon

“sports analytics and behavioral economics are the same field.”
Richard Thaler · 32:43

“The fact that it gets reflected in the market for picks, that's economics.”
Richard Thaler · 34:26

#moneyball#sports analytics#markets

Takeaway35:51

Uncertainty Creates the Space Where Biases Thrive

Imas argues that many behavioral effects weaken when the relevant answer or value is known. When outcomes are uncertain, people must form beliefs and preferences under ambiguity, creating room for anchoring, optimism, and other biases.

A known asset value removes the winner's curse
Anchors have little effect on someone who already knows the answer
Uncertainty shapes both beliefs and preferences
Expert certainty would reduce many behavioral distortions

“If we know what the value of the plot is, there's no winner's curse.”
Alex Imas · 35:58

“Almost every single behavioral economic phenomenon has is bred and. Fed through uncertainty.”
Alex Imas · 36:31

#uncertainty#anchoring#bias

Frameworks in this episode

Decision Feedback Audit

Make It Easy Choice Architecture

Random-Sale Counterfactual Audit

Insights & moments

⚡Myth Buster· 1

Behavioral Biases Survive Outside Student Laboratories

◆Hot Take· 3