The Winner's Curse

Nobel Prize winner Richard Thaler and rising star economist Alex Imas explore behavioural economics in this fully updated edition of the seminal work The Winner's Curse.

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

In the original 1992 version of The Winner's Curse, Richard Thaler introduced readers to behavioural economics, challenging the notion of traditional economics that people are selfish, rational optimisers and behave accordingly every time. Three decades later, Thaler has teamed up with economist Alex Imas to provide fresh insights in this fully updated edition. They revisit Thaler's original columns on economic anomalies, some written with collaborators like Daniel Kahneman and Amos Tversky, and explore how these anomalies hold up today.

Many anomalies remain, whether in households saving for retirement (or not), professional golfers putting for millions of dollars, or shoppers at large retail chains. 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 they have gotten funnier.

With both readability and rigour, The Winner's Curse is approachable for anyone with even a cursory understanding of economics, without oversimplifying so that experts cannot read it without cringing. In the final chapter, the authors reflect on the field's progress and future. Thaler and Imas offer an updated classic even more relevant today to understand the true nature of decision-making in today's economy.

The website www.thewinnerscurse.org provides a wealth of additional resources to accompany the book.