Richard Thaler on Why People are Much More Irrational than Economists Believe

So that shows sort of in a blunt way that if you give people a complicated problem, they don't solve. And giving people all the options isn't a good way to do it. It would be like going to a back to the restaurant example. You you wouldn't go to a restaurant where they give you a list of all of their ingredients, right? That would be horrible.

No, you want the best dinner. And now the good fight with Yasha Monk. The basic assumptions in the field of economics include the idea that people, by and large, behave rationally, that they are selfish and profit maximizing in a way that is predictable based on those assumptions. But that of course turns out to be wrong in many contexts.

For example, if you are willing to spend $10 on some coffee cup once you own it. It may take $20 or $30 to persuade you to sell it on. That is only one of many examples in which it turns out though we behave rather differently from how economic theory predicts. So what does that mean for economics? And what does that mean for public policy?

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