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The Winner's Curse

by Richard H. Thaler

Princeton UP, 1994

Category: Concepts & Trends

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The Winner's Curse

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In this summary you will learn

  • Why you should not trust everything you learned in your introductory economics class
  • Why some experts argue against economic rationality
  • Why people are behaviorally driven and are not always rational

Why you should read The Winner's Curse

getAbstract.com highly recommends this classic of economic literature, one of the first (more or less) accessible presentations of the evidence against economic rationality. Economists have assumed, conventionally, that economic choice rests on a foundation of rationality. For instance, economists tend to think that people will put the same value on two mathematically identical offers. Yet laboratory experiments have proven what everyday experience suggests: people are not quite rational. Author Richard H. Thaler, a founding father of behavioral economics, presents convincing exhibits to make the case that the assumption of economic rationality is an awfully big pill to swallow. Stylistically, his book strikes a neat balance between accessibility and obscurity. A reader will need a certain amount of schooling in economics and a great deal of patience with academic prose to wade through every word of every chapter, although the payoff is substantial. However, it is possible for the impatient reader to get the gist by reading the introduction, the first page or two of each chapter and the epilogue. And even that is eminently worthwhile.

About the Author

Richard H. Thaler is a professor of behavioral science and economics at the Graduate School of Business at the University of Chicago.

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Maurizio Mondello October 19, 2010

One small but significant correction to the summary text:
On pag.2 the statement "It does not take a great deal of analytical acumen to see that NOT talking is the best strategy." (Emphasis mine) should actually read "It does not take a great deal of analytical acumen to see that talking is the best strategy". Talking is the dominant strategy based on elementary game theory; "real people" may beg to disagree...

Koni Gebistorf October 20, 2010

Oh yes, you're absolutely right. We'll correct that.
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