Richard Thaler discusses The Winner's Curse with Ulrike Malmendier and Stefano DellaVigna

January 29, 2026. Photo by Hagit Caspi

Nobel laureate Richard Thaler discusses his new book with UC Berkeley Economics professors Stefano DellaVigna and Ulrike Malmendier, exploring four decades of behavioral economics and why seemingly irrelevant details determine policy success.

When Richard Thaler's 1992 Winner's Curse landed on Ulrike Malmendier's desk as a Harvard graduate student, it felt like permission to question everything. She'd arrived well-trained in mechanism design and contract theory, fascinated by elegant models of rational optimization. But something nagged at her: the humans in economic theory bore no resemblance to the humans everywhere else—the ones in courtrooms fighting over mistakes, getting emotional about decisions, behaving nothing like perfectly rational optimizers.

"I still remember sitting in Littauer library," Malmendier told a Berkeley audience, "and Stefano sliding over the original Winner's Curse—this book collecting tons of fascinating stories about humans behaving exactly as I knew them from the real world."

That book helped launch a revolution. Thaler—who won the 2017 Nobel Prize for his contributions to behavioral economics—joined Malmendier, faculty director of the O'Donnell Center for Behavioral Economics at UC Berkeley’s Haas School of Business, and Stefano DellaVigna, chair of Berkeley's Department of Economics, for a conversation at UC Berkeley Haas. Jointly hosted by the O’Donnell Center for Behavioral Economics and the Department of Economics, the discussion focused on Thaler's newly published The Winner's Curse: Behavioral Economics Anomalies, Then and Now (2025), co-authored with Alex Imas. The "then and now" structure revisits Thaler's original anomalies columns from four decades ago, revealing something remarkable: nearly everything discovered in laboratory experiments back then holds up in real-world data today with stunning consistency.

DellaVigna opened the conversation by asking Thaler if he owns a DeLorean—a tongue-in-cheek reference to the movie “Back to the Future” to show how prescient the original book was. Reading it today feels "uncanny"—nearly every major theme in contemporary behavioral economics, from present bias to fairness concerns, was already there. "It's unusual, 40 years later," he observed.

Some surprises emerged along the way. Thaler, a professor of behavioral science and economics at the University of Chicago’s Booth School of Business, confessed he'd have bet everything on behavioral economics transforming marketing rather than finance. Financial markets seemed impervious to behavioral insights—all those efficient-market theorists and ready arbitrageurs should eliminate systematic mistakes. Instead, behavioral finance flourished while marketing departments got taken over by industrial organization economists. The difference, Malmendier suggested, is data density: financial markets generate constant high-frequency information that makes deviations from rational models impossible to dismiss.

DellaVigna noted that while economists can be frustratingly stubborn about their assumptions, they have one virtue: "they don't get tired of the important bread and butter topics"—attitude toward risk, time preferences, and decision-making under uncertainty. This persistence on fundamentals, rather than chasing novel effects, made economics a natural home for behavioral insights. The field doesn't demand you constantly discover new phenomena; it lets you develop better models of how humans actually handle insurance decisions or retirement savings.

The policy discussion turned to missed opportunities. Thaler expressed regret about not being involved in designing the Affordable Care Act's enrollment system. Someone decided to name coverage tiers bronze, silver, gold, and platinum—brand names that evoke quality rankings. Then they added one more tier: "catastrophic." Not exactly a selling point for high-deductible plans that would have saved consumers money.

"Supposedly irrelevant factors," Thaler said with a wry smile, noting that half of employees at one large company picked "dominated" health plans—policies where they'd pay more no matter how much healthcare they used.

Malmendier, who advises the German government as one of the "Five Sages" on the German Council of Economic Experts, nodded in recognition. "It's less glorious to do the plumbing—thinking about the names for different categories and implementation details. But it can determine 90% of your effect size." The problem for academics: no publications emerge from that work, and they rarely get invited to the crucial meetings where details get decided.

UC Berkeley's influence on behavioral economics surfaced throughout the discussion. When the old guard of economists proved too rigidly cemented in their neoclassical worldview, Thaler decided to "corrupt the youth"—launching a behavioral economics bootcamp for Ph.D. students in the mid-1990s that ran every two summers. As Malmendier noted in her introduction, while another intellectual leader who set out to corrupt the youth in 399 BC ended up drinking the hemlock cup, "it has been working out a bit better for Richard than for Socrates"—earning him the 2017 Nobel Prize.

Berkeley provided fertile ground for that mission. The original "Anomalies" column in the Journal of Economic Perspectives emerged from conversations with economist Hal Varian, founding dean of UC Berkeley’s School of Information and former chief economist at Google. Berkeley Haas' Carl Shapiro, the Transamerica Chair in Business Strategy Emeritus, was instrumental in launching the Anomalies column and attended the talk. Daniel Kahneman, Thaler's mentor and collaborator who won the 2002 Nobel for economics, spent years as a Berkeley professor. Along with former Berkeley professor George Akerlof—who also went on to win a Nobel—Kahneman created the pioneering Berkeley PhD course that bridged social and cognitive psychology and economics and laid the groundwork for the field of behavioral economics.. Two chapters in the new book feature Kahneman as co-author.

As Malmendier put it, "Berkeley really is the hub for behavioral economics and finance"—from undergraduate and graduate courses to the newly launched O'Donnell Center for Behavioral Economics, where researchers are pushing the field's frontiers beyond psychology into life sciences, exploring how stress, trauma, and emotions shape economic decisions.

Learn more about Berkeley Economics' research centers, the Ideas Hub at the O’Donnell Center, and support this groundbreaking work.