July 2026
- Jul 18, 2026ConceptsThe Sunk Cost Fallacy: Why We Throw Good Money After BadThe sunk cost fallacy explained: Arkes and Blumer's theatre experiment, loss aversion, the Concorde fallacy, escalation of commitment, and how to beat it.
- Jul 12, 2026ConceptsThe Availability Heuristic: Why Vivid Beats LikelyThe availability heuristic explained: why we judge probability by ease of recall, how vivid events distort risk, and how to defend against the bias.
- Jul 9, 2026ConceptsThe Anchoring Effect: How the First Number Shapes the RestThe anchoring effect explained through Tversky and Kahneman's wheel experiment, selective accessibility, courtroom and pricing examples, and how to fight it.
January 2026
July 2025
June 2025
- Jun 29, 2025ExplainersHow Incentives Shape OutcomesIncentives direct attention and effort toward rewarded behaviors. They signal importance and create competition.
- Jun 19, 2025ExplainersOrigins of Decision Theory: Key DevelopmentsDecision theory origins: Bernoulli introduced expected utility in 1738. Von Neumann and Morgenstern developed game theory and axioms of...
- Jun 19, 2025ExplainersOrigins of Behavioral EconomicsBehavioral economics origins: Simon introduced bounded rationality in 1950s. Kahneman and Tversky revealed cognitive biases and heuristics in 1970s.
- Jun 17, 2025ExplainersStep-by-Step: Analyzing Incentive StructuresMap what's rewarded with bonuses and recognition. Identify what's punished with penalties and criticism. Compare stated versus actual incentives.
- Jun 3, 2025ExplainersTranslating Behavioral Economics into Real DecisionsApply behavioral economics: recognize cognitive biases like anchoring and loss aversion, understand status quo bias, and design choices accounting...
February 2025
January 2025
- Jan 26, 2025ConceptsThe Norm of Reciprocity: Gifts, Debts, and ObligationsIn 1971, Dennis Regan had a confederate give subjects a Coke during a break in an experiment.
- Jan 10, 2025ConceptsProspect Theory: Why Framing Changes How Outcomes FeelTversky and Kahneman's 1981 Asian Disease Problem: 72% of subjects chose certain survival of 200 people over a gamble for all 600.
- Jan 8, 2025ConceptsMental Accounting: Why a Dollar Is Not Always a DollarYou have two $100 bills in your wallet: one earmarked for rent, one for entertainment. You spend the entertainment $100 on dinner.
December 2024
- Dec 27, 2024ConceptsThe IKEA Effect: Why We Overvalue What We Build OurselvesNorton, Mochon, and Ariely asked subjects to assemble IKEA boxes, then bid on them in an auction alongside identical expert-assembled boxes.
- Dec 25, 2024ConceptsThe Decoy Effect: How Choices Influence Your DecisionsThe Economist offered three subscription options: digital-only for $59, print-only for $125, and print-plus-digital for $125.
- Dec 22, 2024ConceptsChoice Architecture: Designing Decisions for ImpactWhen Brian Wansink rearranged a school cafeteria (putting fruit at eye level and making desserts harder to reach), fruit consumption increased by...
- Dec 18, 2024ConceptsWhat Is the Peak-End Rule: Why Endings Define ExperiencesThe peak-end rule shows that people judge experiences by their peak moment and ending, not their average. Learn the research and how to design better experiences.
- Dec 12, 2024ConceptsUnderstanding Cognitive Bias: Irrational JudgmentsCognitive biases are systematic errors in thinking that cause people to make irrational judgments, often without realizing it, affecting decisions...
- Dec 7, 2024ConceptsHyperbolic Discounting: Why the Present Always WinsRichard Thaler found that people prefer $15 now over $20 in a month, but are indifferent between $15 in a year and $20 in 13 months.
- Dec 1, 2024ConceptsWhat Is the Status Quo BiasStatus quo bias is our tendency to prefer the current state of affairs over change. Learn about Samuelson and Zeckhauser's research, loss aversion, and how to overcome it.
November 2024
- Nov 29, 2024ConceptsChoice Overload: When More Options Produce Fewer DecisionsAt Draeger's grocery store in 1995, a display of 24 jams attracted 60% of passing shoppers. A display of 6 jams attracted 40%.
- Nov 28, 2024ConceptsThe Endowment Effect: Why We Overvalue What We OwnIn 1990, Kahneman, Knetsch and Thaler randomly gave Cornell students a coffee mug. Sellers demanded a median $7.12 to give it up.
- Nov 27, 2024ConceptsThe Overconfidence Effect: The Mistakes of the SmartIn 1998, Long-Term Capital Management, run by two Nobel laureates and a team of PhDs, lost $4.6 billion in under four months.
- Nov 25, 2024ConceptsFraming Effect: How Presentation Influences DecisionsIn Kahneman and Tversky's 1981 experiment, 72% of people chose the option that saved 200 lives.
- Nov 22, 2024ConceptsThe Optimism Bias: Why We Expect the Best OutcomesIn 1957, the Sydney Opera House was estimated at £3.5 million, to be completed by 1963. Final cost: AUD $102 million. Completed: 1973.
- Nov 21, 2024ConceptsGambler's Fallacy: Misconceptions About RandomnessOn August 18, 1913, a Monte Carlo roulette wheel hit black 26 consecutive times. Gamblers lost millions betting on red, certain it was 'due.' The...
- Nov 19, 2024ConceptsAnchoring Bias: The First Number Shapes Your MindIn 1974, Kahneman and Tversky spun a rigged wheel in front of subjects, who knew it was rigged, and it still bent their estimates.
- Nov 13, 2024ConceptsLoss Aversion: Why Losing $100 Hurts More Than Winning $150Kahneman and Tversky's 1979 prospect theory established that losses loom roughly 2 to 2.5 times larger than equivalent gains in subjective weight. Most people refuse a coin flip where they win $150 if heads and lose $100 if tails, despite a positive expected value. Loss aversion shapes housing markets, sports decisions, financial portfolios, and why we stay in bad situations far longer than rational calculation would predict.
- Nov 11, 2024ConceptsRegression to the Mean: Statistical Insights ExplainedIsraeli Air Force flight instructors were certain punishment worked better than praise: every time they praised a good flight, the next was worse.
October 2024
August 2024
March 2024
January 2024
December 2023
- Dec 14, 2023ConceptsWhy Smart People Make Irrational Financial ChoicesSmart people make terrible financial decisions all the time. Behavioral economics explains the cognitive biases, loss aversion, present bias,...
- Dec 7, 2023ConceptsWhat Is Game Theory? Strategy, Equilibrium, and Why PeopleGame theory is the mathematical study of strategic interaction. From the Prisoner's Dilemma to nuclear deterrence, this explainer covers Nash equilibria, cooperation, auctions, signaling, and why the theory changed economics, biology, and political science.
- Dec 3, 2023ConceptsWhat Is Behavioral Economics? How Psychology Overturned the Rational ActorBehavioral economics combines psychology and economics to explain how people actually make decisions. This explainer covers prospect theory, loss aversion, nudge theory, cognitive biases, and why the rational actor model was wrong.
November 2023
- Nov 28, 2023ConceptsUnderstanding Financial Decision-Making Through PsychologyWhy smart people make bad financial decisions, and what behavioral economics, psychology, and decades of research reveal about how to think about...
- Nov 17, 2023ConceptsKey Cognitive Biases and Their Impact on Decision MakingCognitive biases are systematic errors in reasoning identified by Kahneman, Tversky, and decades of research.
- Nov 10, 2023ConceptsEffective Money-Saving Strategies Backed by ResearchA research-backed guide to saving money effectively: the behavioral science of present bias, automatic savings, the 50/30/20 rule, zero-based...
October 2023
August 2023
January 2023
December 2022
- Dec 31, 2022ConceptsPsychological Ownership: Why We Claim What's Not OursPsychological ownership explains why we feel things belong to us even without legal title. Learn how it drives the endowment effect, IKEA effect,...
- Dec 27, 2022ConceptsInflation Psychology: Behavior in Times of Price IncreaseHow inflation changes behavior, expectations, and trust: covering money illusion, panic buying, wage-price spirals, and the self-fulfilling...
- Dec 21, 2022ConceptsThe Bandwagon Effect: Impact on Markets and ElectionsThe bandwagon effect explains why people follow the crowd even against their own judgment. Explore its role in markets, elections, and how to...
- Dec 7, 2022ConceptsUnderstanding Bounded Rationality in Decision MakingHerbert Simon's bounded rationality explains why humans satisfice rather than optimize. Learn about cognitive limits, heuristics as rational...
- Dec 4, 2022ConceptsWinner's Curse: Why Winning Auctions Can Cost YouThe winner's curse explains why the highest bidder often overpays. Learn how it affects M&A deals, IPOs, talent bidding wars, and how to avoid it.
November 2022
- Nov 26, 2022ConceptsWhat Is Behavioral Economics? Psychology and Decision-MakingBehavioral economics combines psychology and economics to explain how people actually make decisions.
- Nov 23, 2022ConceptsSunk Cost Fallacy and Its Effect on Decision MakingBritain and France had signed a treaty to build the Concorde supersonic jet in 1962. By 1968 it was clear the aircraft would never be commercially...
- Nov 19, 2022ConceptsMoral Hazard Explained: Risk from ProtectionMoral hazard occurs when protection from consequences encourages riskier behavior. Learn its origins, real-world examples, and how to design...
- Nov 18, 2022ConceptsThinking About Risk: A Practical Framework ExplainedA practical framework for thinking about risk: expected value vs utility, availability heuristic, tail risks, diversification, and the Kelly...
- Nov 14, 2022ConceptsEffective Budgeting Strategies: Building a Functional BudgetLearn how to build a budget that works using the 50/30/20 rule, zero-based budgeting, and envelope method, plus the behavioral science of why...
October 2022
September 2022
- Sep 28, 2022ConceptsWhat Is the Principal-Agent Problem and Why It MattersThe principal-agent problem occurs when someone acts on your behalf but has different incentives.
- Sep 9, 2022ExplainersAsymmetric Information in Economics: Key ConceptsAsymmetric information occurs when one party in a transaction knows more than the other. Learn Akerlof's lemons market, adverse selection, moral...
August 2022
July 2022
- Jul 24, 2022ConceptsWhat Is the Hot Hand Fallacy: When Streaks Are IllusionsThe hot hand fallacy describes the belief that a player on a streak is more likely to succeed again. But is it really a fallacy?
- Jul 16, 2022ConceptsWhat Is Narrative Economics: How Stories Move MarketsNobel laureate Robert Shiller argues that economic narratives spread like viruses and drive market booms and busts. Learn how stories shape economies.
- Jul 1, 2022ConceptsWhat Is the Default Effect: Why Pre-Selected Options WinThe default effect shows that pre-selected options are chosen far more often than alternatives.
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