The Winner’s Curse: Anomalies in Behavioral Economics

Nobel Prize winner Richard H. Thaler and rising star economist Alex O. Imas explore the past, present, and cutting-edge future in behavioral economics in The Winner’s Curse.

Why do people cooperate with one another when they have no obvious motivation to do so? Why do we hold on to possessions of little value? And why is the winner of an auction so often disappointed?

Over thirty years ago, Richard H. Thaler introduced readers to behavioral economics in his seminal Anomalies column, written with collaborators including Daniel Kahneman and Amos Tversky. These provocative articles challenged the fundamental idea at the heart of economics that people are selfish, rational optimizers, and provided the foundation for what became behavioral economics. That was then.

Now, three decades later, Thaler has teamed up with economist Alex O. Imas to write a new book with an original and creative format. Each chapter starts with an original Anomaly, retaining the spirit of its time stamp. Then, shifting to the present, the authors provide updates to each, asking how the original findings have held up and how the field has evolved since then.

It turns out that the original findings not only hold up well, but they show up almost everywhere. Anomalies pop up in people’s decisions to save for retirement and how they carry outstanding credit card debt. Even experts fail to optimize. The key concept of loss aversion explains missed putts by PGA pros and the selection of which stocks to sell by portfolio managers. In this era of meme stocks and Dogecoin, it is hard to defend the view that financial markets are highly efficient. The good news, however, is that the anomalies have gotten funnier.

With both readability and rigor, The Winner’s Curse is for anyone, from those with a cursory understanding of economics to fellow economists. Each chapter provides a key insight into human behavior so readers learn how to better understand the choices made by their friends, colleagues, and customers, and they might just become better at making decisions themselves. Only recommended for humans.

Richard H. Thaler received the 2017 Nobel Prize in Economic Sciences. He is a distinguished professor of economics and behavioral science at the University of Chicago’s Booth School of Business and director of the University of Chicago’s Center for Decision Research. He is the New York Times bestselling coauthor of Nudge: Improving Decisions about Health, Wealth, and Happiness (with Cass Sunstein) and the author of Misbehaving and Quasi Rational Economics. He is also one in a rotating team of economists who writes for TheNew York Times ＂Economic View＂ column.

Alex O. Imas is an associate professor of behavioral science and economics at the University of Chicago. He is the recipient of the 2023 Alfred P. Sloan Research Fellowship, the Review of Financial Studies Rising Scholar Award, the New Investigator Award from the Behavioral Science and Policy Association, the Hillel Einhorn New Investigator Award from the Society of Judgment and Decision Making, the Distinguished CESifo Affiliate Award, and the NSF Graduate Research Fellowship. Previously, he was assistant professor of behavioral economics at Carnegie Mellon University.