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Richard Thaler explains the concept of loss aversion through an experiment involving Cornell coffee mugs. Participants who received a mug demanded twice as much to give it up than those who didn't have one were willing to pay to acquire it. This illustrates how people value retaining possessions more than acquiring new ones, leading to less trade.

Nick Kokonas explains how he built the reservation platform 'Tock' by leveraging the sunk cost fallacy. He noticed that people were more likely to show up for reservations if they had prepaid, reducing no-show rates significantly.

Richard Thaler discusses the concept of 'nudges' and how changing a simple form increased employee participation in savings plans from 50% to 90%. By automatically enrolling employees unless they opt out, companies can significantly improve participation rates.

Richard Thaler explains the fairness principle in markets using Uber as an example. He argues that if Uber charged $5,000 for rides during a crisis like 9/11, it would quickly go out of business due to public outrage. This highlights how businesses must consider psychological factors and customer perception, not just profit.

Richard Thaler explains the 'winner's curse' using a classroom auction of a jar of coins. The highest bidder often overpays, illustrating how competitive bidding can lead to irrational decisions. This concept was first identified by engineers at ARCO when bidding for oil leases.

Nick Kokonas discusses the concept of mental accounting, where people irrationally treat money differently based on its source or intended use. For example, people often feel compelled to use a $30 dessert they paid for, even if they're full, because of the sunk cost fallacy.

At a dinner party with economists, I removed a bowl of cashew nuts to prevent overeating. This sparked a discussion on choice, highlighting that more options aren't always better, which contradicts traditional economic theory.

Richard Thaler discusses the resistance he faced in academia when introducing behavioral economics. He recalls a time when he presented his theories on saving behavior to a psychology department, and the audience laughed because they found the traditional economic models unrealistic. Thaler points out that economists believed people behaved like expert billiards players, acting as if they knew physics, which he found absurd.

Richard Thaler shares a story about how people are more likely to attend an event if they've paid for it, even if circumstances change. He notes that people will go to great lengths to honor a financial commitment, illustrating the power of sunk costs.

Richard Thaler and Danny Kahneman explored fairness in economics by asking if it's fair for a hardware store to raise snow shovel prices after a blizzard. Most people said no, except business school students, who believed it was justified based on microeconomic principles.