#830: Nick Kokonas and Richard Thaler, Nobel Prize Laureate — Realistic Economics, Avoiding The Winner’s Curse, Using Temptation Bundling, and Going Against the Establishment

0:00 Hello, boys and girls, ladies and germs. This is Tim Ferris coming at you from a beautiful studio, and I am going to introduce you to an interview, a conversation with three people in total that I've been trying to set up for a year, maybe longer than a year. And it features both a new guest and a fan favorite. So the new guest is Richard H. Thaler. He is the 2017 recipient of the Nobel Memorial Prize in Economic Sciences for his contributions to behavioral economics. There's a lot more to his bio. Which I'll put in the blog post, but let's keep it short. He is also a founding principal at Fuller Thaler Asset Management, which uses behavioral finance to manage.

0:42 More than thirty billion dollars in small cap US. Equities. He is the Co-author of multiple New York Times best selling books. Including Nudge. And misbehaving.

0:55 In the show notes as well. His new book. which is actually a revision of a lot of what he has done and it still holds water is The Winner's Curse Behavioral Economics Anomalies Then and Now co authored with economist Alex O. Emis. My co-host for this conversation with Richard is a friend of his, Nick Kakonis. Nick Kakonis is an entrepreneur, investor, and author, best known as the co-founder of the Alinea Group. sold in twenty twenty four and the reservation platform Talk, which is now owned by American Express. He also has some wild stories from trading derivatives and all sorts of craziness.

1:34 in Chicago for that listen to my first conversation with him on the podcast. After revolutionizing how restaurants and experiences are crafted, booked and managed, he is now focused on creative ventures that blend business, technology, and art For both of these guys, a lot more, I could say, but I'll put it in the show notes. You can find both of them on X. You can find Richard at R underscore Thailor. T H A L E R and then Nick is at At Nick Kakonis, K O K O N A S. And without further ado, please enjoy a wide ranging conversation with Richard.

2:07 And Nick. Optimal minimal. At this altitude, I can run flat out for a half mile before my hands start shaking. And then also do personal questions. No we're just seeing it. I'm a cybernetic organism, living tissue over metal endoskeleton.

2:24 So Well, I'm uh I'm excited to dive in and I thought, Nick, we would let you take the reins because you had this idea of starting from first principles or at least fundamentals, and I think that is a great place To start because maybe the things we think we understand we don't understand, or the things we think we've defined for ourselves we haven't defined.

2:52 When I got to college at a liberal arts college And didn't know what I was gonna study. But I knew I enjoyed business, quote unquote, or might work in business of some sort. You're left with the study of economics there.

3:06 Like you're not getting an undergrad MBA or something. So you get to economics class. And It's not That at all.

3:13 You know, it's a bunch of models, it's a bunch of all that. So I thought what we would start, which is first principles. What is it The study of economics. And we're going to the best source in the world on that.

3:26 But it's really basic, yet I think fundamentally misunderstood. I think that's actually a great place to start and especially It's not really possible to talk about What behavioral economics is without understanding What economics is.

3:41 And Economics is really Two things. It's People.

3:48 Interacting in markets. And then what are those people doing? And what happened is Sometime right after World War Two. Economists started getting interested in making their models more rigorous and more mathematical.

4:07 And The easiest model to write down of what somebody's doing. is to write down a model in which they're doing it. Perfect. So if you open up any economics textbook

4:23 You'll see The Three letters max. And that's short for maximize. And all models start with that.

4:34 So We assume That When Nick goes to the grocery store. What he chooses is the best.

4:42 Things he could choose. And that's a simplifying assumption. It's simplify for the economist. Because that's the easiest model to write down. And so what are they modeling?

4:57 Like even more fundamentally. Well, what they're modeling is whatever you do. So what route do you take? To drive From home to the golf course.

5:08 The best route. Which home do you choose to buy? The best one. What mortgage do you choose? The best one. Look, economists are Jealous of physical.

5:18 Uh and And they're jealous of physicists. Many economists started out in school. As a math major or physics major or engineering major.

5:31 And then decided oh this is Too hard. But they kind of admire that. So they want a model. That's as accurate as the model you use to send up a rock.

5:47 And the problem is that That problem is solvable. How much stuff do you need to get a rocket to go up there? That's a solvable problem. And

5:59 Figuring out what people do. You know, if you open a book An economics textbook? You actually don't see the word people. Right. You see the word agents.

6:09 Economics starts with Adam Smith. Seventeen seventy six. And it's that way about until Nineteen fifty. So then we start having math. Now we have an equation.

6:23 It says exactly what a smart And so the agents in these models Are getting smarter and smarter. Because the norm is

6:35 My model is better than your model. If my agents are smarter than your agents. And so what does it mean to be rational? within those models. Well, it means to solve the problem the way an economist would.

6:50 And I don't mean that economists think that they're the smartest. No. They may. But If it's an economic problem.

7:00 Like how to adjust your thermostat so you're comfortable And spend the least money. That's a little practical economic problem. And an economist and an engineer might solve it. And knowing you, Nick, you could easily get absorbed with figuring out. How to really do it.

7:20 But Most people can't figure out how to Use that easy using thermostatin. In their house. Much less solve it themselves.

7:28 So People will take shortcuts. And My joke is Instead of writing down max.

7:37 Suppose we wrote down meh. Because what people are doing isn't really Max. Right? It's uh you know, I'll do something. So where I come in And that part of the story is Okay. If people

7:52 Are not capable or interested in solving And they're doing something else, taking some shortcut. Then what? So that's Principle number one.

8:06 Principle number two is Economists again for simplicity Have assumed that people are selfish. And You know

8:16 Most of us care more about ourselves than anybody else. Maybe our family Some family members Yeah. But we

8:26 Give money to charity, you know. NPR collects money. We might care about fairness. We might care about fairness. Right. I'm sure we're gonna have a Uh a discussion about fairness. And we might care about being treated fairly.

8:41 So that was left out of the model. Again Because it w seemed like a simplifying assumption to just start out Yeah, you're making the rocket. equation.

8:53 And you don't really care about the astronauts at this point. Right. You're you just gotta get the rocket. You gotta get the rocket up. And then I'll mention a third thing. Which is These agents

9:05 don't have any self control problems. So they Eat just the right amount. They exercise just the right amount. We wouldn't need these new Fat drugs because

9:19 people would all be optimizing for their health. Yeah. Perfectly fit. And you wouldn't have sold half as many books, Tim. If people were those agents And you know, even other kinds of things you're interested in. Implicitly in this idea that the agents are maximizing

9:39 means they don't need any advice. They're doing it right. You know? They're getting the labor leisure trade off right. They don't need any help in getting along with their spouse.

9:51 Because they're No. I've optimized I've optimized my marriage. It's perfect. And in fact our our wives would Be happy to testify. Yes. They've done a wonderful job. We're both perfect, really. We couldn't be Better husbands. I've been looking forward to this conversation that

10:11 I've always Furrowed my brow at the agents all as rational and selfish because I just don't see that behavior if you look at your neighbor or your friend or someone else. So my question though is not so much To dive into that, we could. And the story of your friend who got hay fever, Richard, when he mowed his lawn, is a pretty funny one from New York Times. Maybe we'll bring that up.

10:35 But suffice to say, people self-sabotage, they care about fairness. There are all these things that seem to invalidate getting the rocket to the moon or that approach. to economics. And I'm wondering Were they just force fitting precision to something? in order to defend it as more rigorous and it was a waste of time? Or was it more like Newtonian physics versus quantum mechanics, where it's like, well, you can actually use Newtonian physics.

11:01 for a lot of good things. Is there anything productive that came of these incorrect assumptions about All agents being rational and selfish is a bedrock assumption. I would say sure. Supply and demand still works. All economics starts with supply and demand.

11:18 If you raise the price, you're gonna sell less. Almost always. And When you write down these More formal models and make more precise predictions.

11:29 Then the question is Are you Adding predictive Power. Through that.

11:37 And I think what happened is We're starting in the fifties and I would say Rationality peaked in the nineties, maybe.

11:47 Where This norm that a model with really, really, really smart People. is the best possible model.

11:56 Eventually people start to realise, well, maybe there's some drawbacks to that. But You can argue and of course I've spent my career arguing about How wrong this is. The great Chicago economist Milton Friedman.

12:11 Had this Defense is It would say, look. I just want A model that

12:18 People are behaving as if They were maximizing. So he would say it doesn't matter if they literally know how to do it. If their behavior is close enough. And so the real debate

12:31 Over my career. Has been About that question. Well let's go back to the start then. I think.

12:39 Of sort of your origin story. And thus the origin story of behavioral economics itself. Because at some point Psychologists start getting involved.

12:52 And they start looking at these models and they start saying Yeah, but people don't really act this way. And so this could be great in a laboratory or on a piece of paper and a spreadsheet. But it might not work in the real world. And there's real consequences to those things. So let's go back to when you were

13:12 A young academic and started coming across Those ideas. Yeah, I guess this is like in grad school. So there's a story I tell about a dinner party. With some other economics graduate students.

13:27 And there's some roast in the oven. It smells great. And there's some adult beverages and I bring out A bowl of cashew nuts. And people started to eat

13:39 Nibbling as they do. And at some point I realized Yeah. Their appetite was in danger. And so I grabbed

13:49 the bowl of cashew nuts and went and hid them in the kitchen. And then I came back into the living room. And people thank me. Oh, thank God you got rid of those nuts. We were gonna eat them. Yeah, so you removed choice. Yeah, I removed choice. And then because this is a group of economists. They start analyzing it.

14:09 There's a rule of thumb, you don't want too many economists at any dinner party. And this is a good example of it. So Somebody mentions that well, we're actually not allowed to be happy about that because More options is always better. And we used to have the option of eating nuts and now we don't.

14:26 Well you can imagine. But the principle the discussion wasn't that interesting, but the principle is interesting. That Sometimes We

14:35 Prefer Not to have Options. And so I started with this list. Of stuff like that.

14:46 And Then The work comes into All right, well

14:52 How can you go beyond a story? So yeah, that's an amusing story. But So what? Yeah.

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17:31 So it You wanna Change the framework. But now you're introducing something super messy.

17:40 Which is humans and psychology and irrationality and all of those things. So how do you do that without getting rid of the rigger? Yeah, just to Make sure I'm tracking. It seems like so you've created this list of sacred cows that you had put on trial, but the question was how to do it quantitatively or in some way like

17:57 Nick said rigorously, without just leaving it as an anecdote. Well, there are two parts to it. One is can you show that people are really doing that. And then second, can you Create rigorous models. That describe that behavior.

18:15 And I think we Might as well stick to the Demonstration part. So we can go from that

18:23 the cashew story and say, Well what does that have to do with the real world? And we can talk about retirement savings. As a first principle. Americans don't save. Unless the money is taken from their paycheck and put into a retirement place.

18:42 Now Economy would say. It doesn't matter. People are gonna save the right amount. There have been two Nobel Prizes.

18:50 for theories that basically say People save the right amount. They take their income and they Decide. Okay, I'd like this consumption path over my lifetime.

19:03 And now how much do I have to save to get that? And then I keep Reoptimizing Market goes up, I can save a little less. I mean that seems so obviously wrong. So were you frustrated at this point? Like you'd

19:14 I read some of your old papers in preparation for this and I saw these little backhanded little mentions. that were kind of snide. I mean, it's funny reading forty year old academic papers. and reading the snark in them, right? I mean there's actual snark in young Thaler. Long before the never escaped. It never escaped. So

19:34 You know, tell me a little bit about that, because it seems to me like In hindsight. You know, the first time we met, we played golf together after like a Twitter exchange. And I remember Thinking to myself as you were saying this.

19:48 I would go like, Yeah, well, obviously. And then you look at me like no no no, you don't understand for a hundred and fifty years, that wasn't obvious. And so within the context of this academic world Why was any of Applying what seems to be

20:02 Pretty logical stuff. Why was it resisted so much? Why is that system built like that? You know, I can tell you w while I was living through that The Emperor has no clothes. Was a

20:17 Thought. Why am I seeing that and no one else does? And the no one else was just economists. So I remember giving a talk

20:27 In the Psychology department at Cornell where I was teaching. And I was talking about this theory of How people save. And the audience just starts laughing.

20:38 Yeah, that's what I did. And they're laughing and and they're And uh one of my economist friends was there and he had to Assure them that I wasn't making this up. And that this wasn't a caricature.

20:54 Of economic theory? No, there are economists one floor up from here. Who actually believe this is the way people behave. But they didn't even think of it as an abstraction in the model. They actually thought like, hey, this is how humans go through life. Or As if

21:11 Remember those magic? Yes. Yeah. That was You know, they don't have to know how to do a present value. But they're acting as if they knew.

21:23 That's right. That has a bit of a like Maxing works in mysterious ways type of Referring to it. Is that defensible as an argument? Yeah, as if or is that just kind of a A wiggle.

21:36 Look, it was The winning argument When I started on this. And in fact in my first paper which was published in nineteen eighty my first behavioral economics paper.

21:50 It ends with a long response to Milton Friedman's as if He talks about A billiards player. It's an expert billiards player, I should point out. That he talks about He says he may not know physics or

22:05 Trigonometry. But he acts as if he did. Is it really inferring that like the law of large numbers or crowd intelligence or whatever you want to call it. Or you go like, Well, it doesn't matter what the individual does.

22:20 As an aggregate. When we look at a model, like it will average out that the smart people and the idiots all get to the midline, which is the model. There are two things here. One is When he talked about this expert billiards player, I pointed out in this article

22:37 You know We actually study Regular people. Not experts. So

22:43 You're a pretty good golfer. I'm a mediocre golfer. Neither of us play like Tiger Woods. Right. So even though you're a pretty good golfer

22:53 We wouldn't want to predict Well, you're gonna hit a shot by saying, What would Tiger do? So That was m my first point about the billiards player is let's just go to a bar. And try to predict.

23:06 What? This guy is gonna do. Is the model Gonna be the one that is optimizing? Or is it the model of the Regular guy at a bar.

23:17 And if we're studying investors They're not Warren Buffett. You know. They're pretty far from Warren Buffett. So

23:26 The second thing is and it's sort of another version of the same thing, which is If we're trying to Describe behavior. Whose behavior is it? So, you know, there's a lot of discussion

23:42 In say monetary policy. About expectations. The Fed will say we have to change interest rates because We're worried that If prices go up, people will expect them to go up further.

23:57 I'm always asking my friends who are in that field Whose expectations are they talking about? If it's the Guy walking down Michigan Avenue. They have no expectations about inflation.

24:11 They may have impressions of what's going on now. Like oh Meet Thai now. Eggs. Eggs are high, right. Gasoline.

24:21 You know, I have an electric car, even I'm aware of the price of gas because it's posted in those big signs. So we know kind of the level. Do we have Real forecasts about The future? No.

24:36 Going back a little bit now. How did you then go about designing Thought experiments, actual lab experiments. Experiments out in the public. To

24:48 Take These erratic, if you will, or non-optimal. Behaviors. And

24:57 Go back to the models that you questioned. And Improve them, alter them, change them. If you could give a couple of examples. Loss aversion. Here's the first survey I ever

25:11 My thesis Which was a very traditional bit of economics, although on a kind of exotic topic. It was on the value of saving lives. So if we make A highway safer

25:24 And we save ten lives a year, how much should we be willing to pay for that? And I decided it might be interesting to ask people a question. So I ask people Suppose By attending this lecture today

25:40 You've been exposed to a one in a thousand risk of dying. You have this disease. And There's one in a thousand chance you're gonna die a quick and painless death next week. But I have a cure.

25:53 Here that I can sell. How much would you pay for it? That was one question. Another question was Over at the med school We're studying that same disease.

26:05 We'd like to know how much you would have to pay you To expose yourself to a one in a thousand chance. Of getting that. Disease and there's no cure. Now economic theory says the answers to those two questions have to be

26:21 The same. So The amount I'm willing to pay to get rid of it. Or the amount of Have to be paid to do it.

26:29 Should be Approximately the same. They're nowhere near the same. So people would say Oh, I'd pay a thousand dollars. To get that cure.

26:40 I wouldn't do that experiment for a million dollars. Now they're lying. Because They drive, they're not. They wouldn't

26:51 Choose To be in that experiment for a million. So okay, so that's Buying and selling prices are wildly different. Now how do we get that down to something more real?

27:03 You asked about an experiment. There's a A famous Experiment I did with my Friend and mentor Danny Conneman. And our friend Jack Netsch.

27:13 And the way it works is is very simple. We go into A classroom. And We did some of these at Cornell. We would go and

27:22 Put a Cornell coffee mug. Of the sort you can get at any campus bookstore. We put it on every other desk. And then we say, All right. If you have a mug.

27:35 We ask you Of each of the following prices are you willing to sell? Start at ten dollars to go down. And if you don't have a mug You get the same form and say at each of the following prices are you willing to buy.

27:49 And Now The mugs are assigned at random. People have had this mug for thirty seconds. It's not their grandma's mug.

27:59 It's been in their possession. For thirty seconds. What do you find? Well, The people who have a mug demand twice as much to give it up. than the ones who don't have a mug are willing to pay to get.

28:13 Why is that, do you think? Well If I've got it, I don't want to give it up. But I I wouldn't pay much to get it. Right.

28:23 between retaining something and acquiring it. are really wide. What are the consequences of that? Well, It means there's much less trading. And much less change than

28:35 We would expect Because We hold on to the stuff that we have. Because we don't like giving it up. But

28:44 When there's a big fire like they had in LA last year. People are gonna have to decide all right now. They don't have the option of moving into the old house. What are they gonna do? So There's a lot of discussion these days.

28:58 About How hard it is to build in the United States. And We've set up Rules

29:07 Well intentioned rules. The environment safer and Clean air is good. I think Almost everybody thinks clean air is good.

29:17 But It shouldn't Make it Five times as expensive. To build a road.

29:25 As It would otherwise be. So Partly because of loss aversion, there's something that we call status quo bias. Well, this is the Nimbies.

29:36 Well the NIMBE. Yeah. Oh yeah. We don't want to Allow you to build that thing. The interesting thing about these Is that the way that we met

29:49 is that I was running experiments of loss aversion. With a restaurant. So I had these restaurants. I had people making reservations. If they had absolutely not a single penny in They didn't care.

30:01 About anything. But you could take the richest person in the world unless they had five dollars in. for their reservation as a deposit. It took the no show rate from fourteen percent to under three percent. And I wrote about that and published it.

30:14 And these economists From Northwestern. Published an article saying that I was an idiot. And I should just run an auction. And

30:25 I replied to them. Suggesting that Maybe there's a little bit of human behavior and psychology involved in this. And I think that I've got it right and I have hundreds of thousands of examples as to why this is working for my business.

30:38 And Saylor Read this and tweeted at me. But at the time I didn't know who he was. And so finally people said, Hey, you know, you've got one of the best economics professors in the world who really wants to talk to you about this.

30:52 And so I was just doing it out of intuition and experimentation. But they're the same. Sorts of experiments. in a practical way that you are abstracting into these traditional models.

31:05 Conneman and I wrote another paper where We tried to find out what people think is fair. Yeah, fairness is a really interesting concept. You know, the Northwestern economists that were dumping on Nick. thought that what he really should do Is just

31:22 auction off the tables at seven thirty on Saturday night for whatever price he could get. Because I'd be maximizing my utility. Well no, you'd be maximizing your profit. Right. Right. And there is some rich guy who will pay two thousand dollars. For sure. Especially then. Yeah. Yeah.

31:40 So You were back and said yeah. But they might not come back. And the questions that we asked in this paper Where scenarios like there's a hardware store that's been selling

31:55 Snow shovels for twenty dollars. And there's a blizzard and they raise the price to thirty dollars. Is that fair? And

32:03 People say no. You know, but There's one exception. You know there's a group. That say absolutely yes.

32:11 And that's Business school students. So I teach a class in decision making. And each week I show them, look, here's the data from some experiment.

32:23 You think these people are idiots. But look. You do it the same. So They may be idiots, but so are you. What's the example.

32:31 Any of them. Any of these. Ex other experiment. This one, unfairness. The business school students are

32:39 Different. From the idiots. Because They think Of course you should

32:45 raise the price of snow shovels after a blizzard, we learned that in micro. Yeah. Well it's the Uber surge pricing. Tim, you know something about that. Yeah, so surge pricing, I thought At the time. That

33:01 There's nothing wrong with search pricing, but You have to put a limit on it. And the example I gave I tried to convince the owner of Uber of this. I said, suppose Uber existed on nine eleven.

33:17 And you had Ubers charge five thousand dollars to drive people back to Greenwich. How many days would Uber still be in business? Minutes. You can't do that. You can't do that. That's the fairness principle. Right. And that that proves the rule that we are psychological. Everyone is a psychological creature when it comes to markets and interaction. Right. It might be the guys that are in that Uber for five grand.

33:47 But even they are gonna be a little pissed. But More importantly, to Uber. If they did that. The thing is at the time

33:58 When they would have these Surge is like of ten X. They were not making any money off of that. It was be fleeting. So they'd make a little bit of money

34:09 Just like If Nick had sold one dinner reservation for ten grand. Yeah, he'd make ten grand. You have

34:17 Thousands of people writing articles. So Uber was making a little bit of money And Pissing off milyens of people. And that was dumb.

34:29 In a business where they had to fight city by city To get permission to take people to the airport. And so The important lesson is That if you're doing

34:43 Business in The real world. And you have customers and employees that are people, not agents. Then You have to do things a bit differently.

34:56 That's like the one sentence summary of Beverly Comics. Richard, could you For people listening and for me, give an example or two. or two of how you take the research and then Apply it.

35:09 in the real world. You mentioned Effectively. Forced savings. Earlier. Maybe that's a domain we could

35:17 Explore. When My Father worked, he was an actuary. Work at a big insurance company.

35:27 He had the pension That was prevalent at that time. Defined benefit pension plan, the old fashioned kind. Where How much you got in your pension just depended on how long you worked and what your s final salary was.

35:42 No decisions. And we gradually started shifting over to the new four oh one K type that's called Define Contribution. Meaning it You put money in

35:55 And invest it and then You get What you have at the end. Now When I started working in this area

36:03 One problem we noticed. Was Lots of people weren't joining. This Savings plan, even though

36:13 Their employer was matching contributions dollar for dollar. Up to say six percent of their salary. So That's like the stupidest thing you could ever do.

36:25 You're making a hundred thousand dollars, they'll say I'm gonna give you six thousand dollars as long as You save six thousand. Yeah. Tax deferred. Yes, right. And economists would say, Well, hundred percent of the people do it. Everybody will do it. And what we noticed is

36:42 In a lot of companies, only half of new workers would sign up within the first year. So how can we fix that? Well Remember we talked about status quo bias. So here's a simple way.

36:56 The way it worked at that time was in order to join you have to fill out a form. And choose some investments and then sign. And this was a piece of paper at the time. So how about if we just change the form and say There's this plan.

37:11 We're gonna put you in. Unless you fill out a form. Saying you don't want it. Yeah. Again, economic theory says

37:19 That won't make any difference. Everybody's gonna join. And certainly. Just filling out a piece of paper. That's enough friction to change things. Yeah, I mean we're giving you six thousand dollars. But

37:31 The first company that did that. New employees now joined ninety percent instead of fifty percent. So I wrote a book called Nudge. And that's an example.

37:44 Of an edge. I am Fascinated by nudges. And tell me if I'm defining this correctly, but some feature of the environment that improves decisions but doesn't force anyone to do anything. Is that a fair yes? I'm trying to quote directly. I'm pretty sure I wrote those words. Yeah, I think you did. So One of the examples that I've heard you Discuss I think this started in the Netherlands.

38:07 But it is the fly. Etch or otherwise put inside of urinals to reduce spillage because a lot of guys are on autopilot. Turns out they like to aim at things. My question is I love that that's what you of everything that you read, that's what you chose to pick. Well, I picked it because at least most guys listening have seen this. A thousand percent. And my question is Is there a certain half-life to the effectiveness of nudges because I remember the first time I saw one of these, I was like, oh, I'm definitely gonna get that fly. I remember it. And then after a while, I was like, okay, I realize this is just painted on enamel or etched into the enamel. It's no longer that interesting. And not to extrapolate from myself to everyone, but I'm wondering if

38:53 You need to Refresh nudges. as you might refresh. And many other things that maybe Nick has experimented with in the realm of business. How do you think about the

39:03 Durability of These types of notches. You know, there's a good example of a nudge of that sort here in Chicago. When Nick and I drive back home We're gonna go on Lakeshore Drive and there's

39:17 A bendy part. It's beautiful road. And a lot of people wipe out around these pens. You really Can't go more than about thirty. And it's a six lane road, so people think they can go fast.

39:30 So what somebody did around the time we wrote that book Little before. Is they painted lines on the road That get closer and closer together. That gives the illusion

39:44 That you're speeding up. And so You're just instinctively Tap the brake and then Don't wipe out your car.

39:55 That's good. Right. Now Those lines they keep repainting them. No one pays attention anymore. I well I don't know. I don't know either. I don't know. But

40:05 I think the fly in the urinal probably won't have any effect. In the Toilet you use at your place of work, or you know, you see it Several times a day or whatever.

40:20 But for the pension thing If we only have to get you to sign up once. That's enough. So yes, attention it may be that we have to do something different to get your attention this time. But there's a rule.

40:35 Which is If you want people to do something, make it easy. That's a rule. That's always true. And

40:44 The more complicated You make things The less people are gonna do it. So You know, I think that's pretty much automatic.

40:54 In terms of Capturing attention, you can you know, that's what The business of advertising Is Constantly

41:04 Trying to do it. And Clickbait. Um ads on social media.

41:12 They're all in the business of I mean social media itself is in the business of that. Right. Keep it simple is a formula that always works. And Getting your attention always works. But

41:25 It won't be the same thing that will Keep getting your attention. So this turned into a whole field. from relatively simple concepts like that called choice architecture. You've done consulting with

41:39 various companies, the NFL, all sorts of People. I don't even know which ones I'm allowed to talk about or not, so I have to be careful. But Tell us a little bit about like When does that

41:50 become a bad thing. Can you turn the nudge? Or can someone that's malicious turn the nudge? into something that takes advantage of the lack of self control.

42:02 In these models. Yeah, sure. We always say we didn't invent nudging. Adam and Eve. Then the serpent, right? There was the apple. So

42:11 human nature has been there all along. Hucksters Have existed Forever. Charles Ponzi didn't read our book.

42:22 Didn't read any of my papers. Neither did Bernie Mainoff. So When we wrote Nudge It was

42:30 Saying look, here are some basic principles of human beh Can we use those to help people make better decisions? So practically speaking, how do you then go into one of the businesses that you've consulted for and come up with Through your framework.

42:50 What they have overlooked. Well, you wanna ask You want people to do more of that. Why are you Making it hard for them to do it.

43:00 That's the answer. But where I was going with that was The same principles Can be used Uh Harm people.

43:08 So if you go into a casino The whole casino has been designed. To get people To bet As much as possible.

43:19 And to m bet on things that Have the worst possible outcome. Right. Yeah. And uh now we have online gambling. And within game gambling and we have Places like Robin Hood.

43:35 that are have made investing feel a lot like Yeah, they gamified it. Yeah. So

43:45 They're making it easy. Right? They've made it easy to bet. It used to be I had to go find a bookie. Now you open your phone. And you can bet on the game that you're watching.

43:57 And that's very tempting. So The principles of understanding the customer And then designing the product. Can be used for good or evil.

44:10 And I take no responsibility. For Somebody optimizing An online gambling app.

44:20 To make it as Attractive as possible. For people to lose all their money. Don't blame me.

44:28 But That's what's gonna happen in a competitive market. With Consumers who are humans.

44:39 Just a quick thanks to one of our sponsors and we'll be right back to the show. Many of you know how deeply I love Japan and its culture of unwavering dedication to craft, refinement, commitment to continuous improvement. But why do I bring this all up? Well the same focus. On improving one thing. Over the span of years is found in today's sponsor, AG One.

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45:43 Slash Tim. That's drink A G one. dot com slash Tim. I

45:51 Richard, uh question for you. How long have you been teaching your uh or how long did you teach? It sounded like it was current day at the decision making. Class. Forty years. Okay. You've had time to work on your material. Yeah.

46:04 I should be better at it, right? Well, I mean I wasn't gonna go that far. I was gonna ask you what seems to be the stickyest of What students repeat back to you from that class.

46:17 As Concepts, frameworks, stories, could be anything at all. And I suppose the Precursor question is what are they hoping to gain from the class in the first place? What's the promise of the class? But I'd be curious to know what sticks. So First thing I will say is

46:33 Nobody thinks they need a class in decision making. Because they're great at decision making. Why would they need a class on that? Do I need a class on breathing? Although you're gonna tell me actually you don't know how to breathe right then. So I've got a frictionless e course for you with lots of in app purchases. But I can So I do hear from

46:54 People. who took a class from me at Cornell forty years ago. Which is Very gratifying. I'm glad that They even remember that they

47:05 Had such a class. What do they remember? They remember stories. Uh Is the only thing people remember.

47:15 They do not remember A formula. They don't remember some abstract Concept. They remember a story or they remember

47:26 Uh Demonstration. Take the concept of the winner's curse. This is An obvious move on my part since I have a new book that's called The Winners Curse. But let's talk about

47:38 The winners curse,'cause it's a great example. Where does Curse The way you do this in a class is you bring in a jar of coins And you say I'm gonna auction this off. You get the money in the jar.

47:52 You mean like the high bidder gets money? Seventy five dollars worth of plans in there. And the high bidder gets seventy five bucks and they pay me something. Something. That's what we're getting to. Right. Yeah. Do they know that it contains seventy five or they just see It's like a jelly bean estimation or something like that. In fact

48:13 You can use televisions or whatever, paper clips. So What do you find in that? You always make money on it.

48:21 The creator of the jar makes money. Yeah, the professor always makes money. Because you have this jar, it's worth seventy five dollars. There will be somebody that'll bid a hundred or a hundred and fifty. And they win. And they're the winner. They win. Yes, they're the winners. Yeah.

48:39 So That experience you can tell people this abstract concept. of something called the winners curse they won't even remember Ватим 'Cause it's got a weird name and it doesn't have anything to do with cursing or witches.

48:55 But They remember, oh yeah. That that guy who Bad. A lot of the things that we're gonna do.

49:04 This concept was not discovered by psychologists. It was discovered by Engineers at Arco An oil company.

49:14 There were bidding for leases. And what I'm gonna insist on Continuing to call the Gulf of Mexico. And what they discovered was The leases that they won had less oil

49:32 Then the Engineers and geologists had told them would be there. And They said, Gee, that's weird, because we thought we had great geologists.

49:45 And what's the problem And The The problem they figured out which very subtle. Which is

49:55 That So Auctions you win are not a random sample of the auctions you bid in. They're the ones where you're the highest bidder. And if you're the highest bidder

50:06 There's a good chance that You bid too much. You bid too much. Right. That leads to an interesting conundrum. It's almost like war games where the only way to when the game is not to play if you're Arco, which means you should just go out of business. Well, so how do you win that if you

50:24 are in that market where you have to bid on these things. That's a great question. So all right. It's nineteen seventy or something, whenever they publish that paper. They get this finding, what should they do? One would be not To go into some other line of business. Another Would be to bid less.

50:45 But then there Not gonna win very many auctions. They came up with A pretty clever solution, with it collusion? No?

50:54 Because that would work. But I bet it's something like that. Major League Baseball. Major League Baseball does that. That was their solution. They were outed on that. No, their solution was to write a paper. Think about it, you know So they made everyone aware of it. They w Right. So instead of going to all the other team owners and say, Hey

51:16 Guys when catfish hunters Becomes a free agent, don't bid. Um You know, that's illegal. But publishing a paper saying

51:26 People are bidding Too much and the more bidders there are, the less you should bid. That's perfectly legal and useful. Now it turns out The

51:38 There's a funny story about this, which is The version of this book, the Winners Curse that I published in nineteen ninety two. The editor who bought that Went to Princeton University Press.

51:52 And then when Nudge came along There was an auction for the rights to bid it. And they pay too much? No. He didn't bid. And I said Peter, how come you didn't bid on this book? I think it's gonna sell.

52:06 He said no, I read The Winner's Curse. I know. You can't bid on your bus. Yeah, right. And no, don't bid in auctions. So I said, Well, you know, maybe this one should have been an exception. But That concept I haven't forgotten your question.

52:21 I don't know whether people will learn that Theoretical lesson. But they'll remember the jar of coins. And they'll remember stories, you know I had two psychologists

52:33 Mentors. Amos Tversky and Danny Kahneman. Now both dead. A must Sadly died at fifty nine, but

52:42 At his funeral His son Read a little note. That Amos had given him. That said something like I'm not gonna get this exactly right.

52:52 But He had Cancer and Yeah, a few months. Where he knew he was dying and

52:58 was spending time talking to his family about it. And he wrote a note saying that he thin the time they've been spending talking has been useful and that He thinks Uh

53:10 People learn through stories. And I've Put that. Little note in my first class. Ever since then.

53:21 And I say to people, look. People will tell you, don't take this class. All he does is tell stories. And I said that's true. And talk about sports. That's also true. But

53:34 Here's this. Line from Aim is smartest man on earth. That's the way you learn. You're gonna learn through the stories.

53:44 So I think, you know, we show people that they're overconfident. And their decision making. Yeah, or in judgments. I mean you ask people What's the length of the Amazon River?

53:59 And give ninety percent confidence limits. Meaning Give a high and low estimate so that you're ninety percent sure. That the correct answer lies somewhere. Yeah. And

54:11 The right answer will be within it. Not ninety percent, but like sixty percent. Yeah, I would not wager on that. I have no idea. But So you know you have no idea, but still the limits are

54:26 So The same is true. For CFOs of Fortune five hundred. I have two friends at Duke.

54:33 У до сервера. Of CFOs. And They're as What's gonna be the return on the S P five hundred over the next year?

54:45 And they are asked for a high and low estimate. And the correct answer comes out between those I think they asked for eighty percent. Limits.

54:56 And it's like Yeah, no one's a third of the time. No It's true that that's an impossible task. Meaning nobody can predict the market.

55:07 But You should know that you can't predict the market. So a correct answer for eighty percent is Well, it's gonna be Somewhere between up twenty percent and down ten.

55:18 That's a reasonable forecast. Yes. But instead they say up Ten minus two percent. There were there was a whole decade. Where

55:29 The average Down. Side scenario was zero. Well that's a recency bias, right? It's like whatever happened the last couple years, people tend to extrapolate into the future. Right. Yeah, yeah. So there were most

55:46 Overconfident. Right before the shit hit the fan. So that was Kacona saying the shit hit the fan. I'm allowed to swear on this podcast. Oh, oh, okay. You can swear. Yeah, you can swear. So you know the the winners curse sounds like a Abstract concept, but Nick knows I

56:05 wrote a paper about The NFL draft. that applies exactly that concept. Teams. Really think

56:15 It's valuable to have the first pick. Or one of the top ten picks. And then you just cited the Chicago Bears. And they're quarterback picks. And that's all you needed to do. Yeah. I mean and you know th I think the Bears traded up Twice.

56:33 To pick quarterbacks. It's not just The bears. But they're not The only team that does this. And My

56:48 Co author and I That paper and somebody else. Have been Again. Updating that.

56:56 And Nothing has changed. But then people actually then hire you To tell them this.

57:04 Because for some reason they can't believe it. Yeah, but then the problem is that there's an owner. Well, let me ask you, Richard, about the hiring just for a second, because the example with Arco involved writing a paper that draws attention to the fact that if you bid the most, you're likely gonna be overpaying, which is a very interesting Strateg. I'm wondering in the case of, say, an NFL team, what is it that they can do? How can they change their

57:30 behavior or Bidding behavior based on You describing the winner's curse and sort of all the connective tissue around it. A top pick they can trade down. So if you have the first pick, you can trade it.

57:45 For the seventh and eighth picks. Or five. Count'em. Five second round picks. And those five players will cost you about the same as

57:58 Yeah, in dollars, in contracts. Yeah. Right. And If you look I mean Any sports fan can rattle off

58:08 Uh Number of Very high Picks. quarterbac and others that have been complete busts.

58:16 So Here's the one statistic from that paper that I think is most compelling. Take The players at any one position. Let's say

58:28 Running backs. And Rank them in the order in which they were picked. So we have the first down to whatever. Now we have

58:39 What's the chance the higher one picked is better than the next one? My co author Cade and I used to call we called this the better than the next guy. Yeah. So it's like a tennis ladder. Right. Yeah. Right. So yeah. And If teams are perfect at predicting

58:55 It'll be a hundred percent. Yeah. Right, if we ranked the number three guys, The shortest. That'll be 100%, right?

59:04 So If they're flipping coins It's fifty percent. It was fifty three percent. Yeah, so all that work, all of the prediction, all of the people, all of the scouting.

59:17 All the combine. And it's pretty much coin flip. Yeah. It's pretty much going flips. So that means more picks are better. So

59:27 Tim's podcast is really about Taking You know, as he always says at the beginning of everyone, the high performers And the people who see things differently. and trying to take the nuggets to that people can apply to their lives. And so

59:41 I know that like Some of what you've studied and done You've looked at people's habits like we were saying at the very beginning, where everyone makes perfect decisions. We live in this wonderful world where People make perfect decisions. And of course that's not the case.

59:54 And that's really what the whole podcast is about like how to change those bad habits into Positive habits. And so what kind of frictions Can we create.

1:00:05 in our lives where we can improve our decision making, we can be more like that ideal agent that actually cares about our economic utility without you know Going nuts and sitting in a room with spreadsheets. But

1:00:20 How do you take these things that you've studied in human nature for forty years? And apply them. to my life normally. Well, you know, let's go back to the caches. This is stuff everybody knows. Your mother told you.

1:00:35 Yeah. If you're trying to quit smoking, you don't have cigarettes around. If you are drinking too much. Lock the wine cellar. Yeah, lock the wine cellar. And

1:00:45 So Make it harder to do the stuff you want to do less of. Yeah, uh and make it easier to do the stuff you want to do more of. Yeah. I mean that seems obvious. That Well

1:01:00 Not so much for economists. Basic book. Basically everything I've done. has seemed obvious after the fact. You know. Selling.

1:01:11 Reservations at a restaurant Instead of as you used to say having five people you pay to say no on the phone That seems like an obvious thing to do. It does, but I will say that Since I have sold the company.

1:01:28 We'll talk about the love one price, right? Like This pinch, if it's identical, should cost the same kind of all over the place. And that's where arbitrage opportunities come from and all of that. And classical. Economics would say well that Those get scrubbed out like because of perfect information and all that.

1:01:45 But as it turns out, you have to then convince business owners That hey, this is not a controversial idea. And you can indeed charge a deposit and change the economics of your business. And I spent over a decade doing that and it was very difficult actually. And no matter how easy we made that choice architecture for them as business owners.

1:02:07 Their psychology was that Well, this is a controversial topic. And then since I've left the company What I've watched is that one of the big competitors Is now simply going to other restaurants. Some of the premier restaurants and they're saying, Well, we'll give you ten thousand dollars to leave.

1:02:23 Talk. Up front cash. Now I would go, Why would they want to give me free money? There is no such thing as a free lunch. But it works remarkably well. And that sort of thing is also an interesting

1:02:37 psychological problem. You know this better than everyb anybody, but People are good at something. Like Being a chef.

1:02:46 Many restaurants Are Run or owned by the chef. And Being a good chef doesn't make you a good business person.

1:02:56 The same is true of Being a Coach. You don't get to be The coach of a team

1:03:05 Just by being smart. You almost always have to have played that sport. And That doesn't make you a good decision maker. And

1:03:16 The field of behavioral economics And The field of sports analytics Think of Michael Lewis's book Moneyball. It's the same field.

1:03:26 So w why do I say that? Well Again, people optimized, right? So Economists would say, well, teams are all going to do the strategy that maximizes their chance of winning.

1:03:40 Well Let's take basketball. There was an innovation Forty years ago. The three point shot.

1:03:49 For that. All shots are worth two points. Now you have a shot that's Fifty percent better. Now

1:03:57 Every team. Had somebody who could make Forty percent of their three point shots. And teams average about half of their two point shots. Now

1:04:09 Nick, see if you can keep up with the math here. Yeah. Forty percent of three expected values. Yeah. Greater than Fifty percent of two. Yeah. How long did it take them to figure that out, though?

1:04:22 Basically forty years. That's right. Steph Curry. Steph Curry, yeah. Take Just Right now I'm gonna say the words

1:04:31 Michael. And give me an image. That comes to mind. And I can tell you what it is. It's Michael

1:04:41 Taking some last second shot. Somewhere mid range with two guys hanging on him. Now that even if you're Michael Jordan That's a low percentage shot. Steve Kerr.

1:04:55 Who's now the coach of the Warriors. was on the team with Jordan. For an entire year. His three point shooting percentage Was fifty percent.

1:05:06 Was that true, really? Yes. I had no idea. And how many shots a game do you think he got? Like one and a half or something. Yeah. Right. So If you have a uh look at a plot of Three point attempt over time.

1:05:20 It's been going up. But very slow. So I'm friends with Darryl Maury, who's the General manager of the

1:05:30 Seventy sixers. I always tease him That he got to be rich and famous because he was the first guy To calculate. That point four times three was greater than point five times two.

1:05:42 Is Actually a really smart guy. But that's kind of true. And then that happens. Everywhere around us. Yes.

1:05:50 Yes. There are examples of that. And again You know, when I Came from Cornell to Chicago. I

1:05:59 Came and Given Job talk, it's called an interview. And you present a paper and They were taking me to lunch.

1:06:07 And we walk out the door and there's literally a twenty dollar bill lying on the People think I'm making up the story. Because it's sort of an apocryphal economic story that Uh economists look at that, it can't be real. Because otherwise somebody would have already picked it up.

1:06:24 I picked it up. So economists economics Really, they think there aren't these twenty dollar bills on the street. And there kind of are. There are. But then what I was gonna say is where do you put that? So I want to just

1:06:38 Touch on a little bit. My favorite concept of yours of all. Because it comes up in my household and in my businesses like once a week. And that is mental accounting. Oh yeah.

1:06:48 And if you could just go over, because I think this one it might be the most Applicable. to every single person that I know. Because people are incredibly irrational about this. Explain what that is.

1:07:01 In economic theory There's money. And it has no labels. There's just You have wealth.

1:07:10 W And then you just It doesn't matter where it is or how you got it or That's it. Now

1:07:21 Humans think about money as Sort of coming in categories. And Where

1:07:32 You know, let's suppose You Take out a pair of jeans you haven't worn in a long time and you find three hundred dollar bills in there. You don't know exactly when you left them there. Oh that feels like a windfall. Jackpot. Right. I can go have a nice meal.

1:07:50 So again the The standard theory is Money has no labels. Now here's a kind of a policy version of this question.

1:08:00 In the financial crisis The Obama White House had to there was Going to be some Tax refund.

1:08:08 To stimulate the economy. And the question was Should we give it an alump? Or should we Spread it out.

1:08:17 Now The Economists will say Doesn't matter. It's W

1:08:24 That's it. Right? Yeah. So It matters. I'm not saying I know exactly what the right answer is. It's it's kind of a complicated question. But the point is is that people take

1:08:37 sort of money and how they acquired it. Matters. To them. Right. Like if I win a hundred dollars off you at golf.

1:08:45 I might go like well I'll buy a bottle of wine with that, but really it's just part of my cumulative wealth. And I should have just done that anyway. Because I had another hundred dollars. Right. But that comes true, like we're selling our house right now. Oh yeah, and I'm pretty sure you ought to just give that to me. Well so my house is gonna get sold. And so there's this concept now

1:09:08 that well that's the money for the next house. Or the the condo we're buying in Chicago. As we downsize. So Somehow the budget is tied from one house to the other, even though

1:09:20 It's completely irrelevant. Like the money's gonna come in from the house sale. And I can use any Pool of It's just in the big swimming pool. It doesn't matter which drop you take, right? Right. And in our companies, I think businesses do a terrible job of that. People get budgets and they become

1:09:36 You know, they own that budget. And They look at tax savings that the company might get is completely different. than earnings that they might get.

1:09:45 And they spend it differently and they think about it differently. And boards I've been on are like Yeah. Talking about all this and what we all said in our businesses, we tried to, Steve Bernacke, I'll give you a shout out. Every dollar spends the same. They're all the same. So I

1:09:58 Got to know the CEO of an airline. Won't mention which one. And I was trying to convince them before COVID Uh They should get rid of

1:10:10 Change fees. And I think I was also lobbying for bag getting baggage fees. And he told me, Well, you know, there's a guy They have a billion dollars a year in baggage fees.

1:10:25 Yeah. There's a guy Who owns that? Now of course owns, what does that mean? It's not that It the money goes to him.

1:10:35 No. He's the baggage guy. Yeah, yeah, yeah. He's pricing out the bag. If it would be like if you're in your restaurant Yeah. Well I'm sure there was A beverage manager and

1:10:47 That money is the same as the same money as all the other Uh and so people, the mental accounting concept. Is Don't do mental accounting, basically, right? I mean now it can be helpful. So

1:11:02 Putting money Into Children's education account. That can be smart. And treating that as off limits.

1:11:13 Some people have trouble Spending too much. Most people have that problem. Some Have the opposite problem? And so It's just like we were talking about you wanna

1:11:25 hide the booze and put the exercise equipment somewhere where It'll be easy to use. It's the same with the money. So you can have a fiction That that

1:11:37 Money So there can be good fictions and bad fictions. Yes. And Now, you know, part of mental accounting, probably the biggest mental accounting thing.

1:11:47 is the so called sunk cost fallacy. And the idea is If you Paid for something. So We go out to dinner.

1:11:57 And we've bought some dessert and we realise, you know, God, we're really full and Neither of us. Need to weigh more. We'll just say that.

1:12:07 So But You know, we paid thirty bucks for that dessert, so we gotta eat it. We gotta eat it. Right, that's dumb. And again

1:12:17 Every economist Teaches that. And this is this sort of discussion I used to have in the old days. I said, Look Why do you have to teach people? The sunk cost fallacy.

1:12:29 And then assume they already know it. You know, people would say, What do you mean I can't. Waste that. I mean, I fully admit your wine example, I do. I fully admit this.

1:12:41 And I even know and every time I do it. I think of the Sun Cost fallacy because you know I've got this old bottle of wine. It's now worth five or six hundred dollars. I would not pay five or six hundred dollars to acquire it. But I will gladly drink it. Buy a five hundred dollar bottle of wine.

1:12:56 Right. And that's it in a nutshell. Right. And that's literally I built the whole company off that. Like the entire company of talk was built off that one concept. Wait, Nick, could you expand on that? How is that built up for that? Well, you know The big friction And maybe you could explain it. I would have ex mentioned it briefly in the intro, but since it's come up a few times. The reservation platform. So he doesn't need to plug it. No, no, no. I'm not I've not tried to plug it. Um, but it was uh that's how we met was because

1:13:27 You know, I got into the restaurant industry by accident in some ways. And then when I got there, I saw all these sort of irrational behaviors. One of them was that people would make reservations for restaurants. And then simply not show up. And it's a big number. It's like twelve, fourteen percent of the people just wouldn't show up. And then even at a destination place like Alinea that I used to own Yeah, six, seven, eight percent of the people wouldn't show up.

1:13:51 And what I realized very quickly was that if people had paid for it. They would show up. They would show up. At all costs. Like the dog could have died and like, you know, the snowstorm is happening, but they're gonna figure out a way to get there.

1:14:08 Because they have paid. some amount of money, whether it's the whole or the half, it doesn't really matter. And It's fascinating because If something more important lines up or something has more economic utility to you.

1:14:23 You should. in classical theory just go, Well, screw it. Like that's already done. I've already spent that three hundred dollars or whatever it is. And now I have something that's more important or more valuable. But people cling to that thing. Very, very, very, very strongly.

1:14:40 I'll tell you a funny story. My daughter lives in Rhode Island. There was A guy a kid in the neighborhood grew up to be a pitcher for the Mets. And He was pitching in some first round playoff game.

1:14:54 And I noticed that and I said I think I can Get you tickets to this game. Why don't you go, that'd be fun.

1:15:02 She says Oh, that's great. That's great. So I'd look online at one of these ticket Sights. And tickets are this was a first round. It wasn't that expensive, so three or four hundred dollars. But then

1:15:15 Wasn't sure which one she would want and how to get them to her. So I say, Okay, here's what I'll send you a thousand dollars. You pick which tickets you want. And take the rest of Oh yeah, dogs.

1:15:29 So she text me. Now she has a choice. She text me back and says. LOL. This is just like in your book. If you send me a thousand dollars, I'm not gonna spend it on baseball tickets. So

1:15:40 Just last week I learned my lesson. We're David Byrne fans in my family. And David Byrne had a show in Providence where she was playing I sent her the tickets.

1:15:52 Yeah, yeah, yeah, yeah. Um Yeah and then she had no joy. They were free. Well they're free. Yes, they have no they're mentally accounted for as zero. Right. So that was the best gift ever. Yeah. Let me hop in. I'd love to talk about cognitive Bieses for a second. A few things have come up already.

1:16:10 Some cost fallacy. I think maybe you were referring to something that I might put under the Category of endowment effect with maybe the mugs might be mixing that up, but My question is. What are good examples? I can think of a few for myself where actually as a backstory, I bought books on cognitive biases and the framing around the reading for me was things to avoid.

1:16:34 Right. These are things that I want to avoid. These are Yellow flags. But what I realized, at least for myself, and maybe I'm misapplying the term but I could basically do what Nick did to his

1:16:47 customers making reservations to myself, for instance. I could prepay for personal trainer or something like that. And it would make me more inclined to do the thing. That I Say I want to do that's good for me.

1:17:02 I know of actually wrote about the case of two engineers. They worked at tech companies. They made Perfectly good money. But they bet each other effectively it was a bet. One dollar. So it's kind of like trading places, but they would show up at the gym at the same time to do something like fifteen minutes of

1:17:21 Treadmill. And if somebody didn't show up, they had to pay the other person a dollar. And these are two people who had failed at every exercise regimen. prior to that, and they both ended up losing fifty plus pounds, even though they didn't really know the nuances of exercise or anything like that. So I'm curious if any examples come to mind where you can actually

1:17:41 use cognitive biases to your advantage. I'm a big believer in that. Uh A good way to get yourself to do something. Is

1:17:53 Have a commitment. Pay for it. And pay for it. It's a monetary commitment. It's pain. It's a little bit of pain. I have some young colleagues who wrote a paper Called paying not to go to the gym. So yes, I I do Pilates.

1:18:08 And If I make an appointment with my trainer, then I go. So There's a clever experiment by A young colleague of mine called Katie Milman, who's big in this

1:18:20 behavior change space and She ran an experiment With getting people to go to the gym. Where what she did was She gave them

1:18:33 The Hunger Games Audiobook And they could only listen to it. When they were on the treadmill. The idea is you pair something good with something that you

1:18:46 Don't want to do. So If you go then you Get to hear the next chapter. You get to hear the next chapter. And

1:18:54 It's like Well if you're binging, imagine To watch the next episode first you have to run around the block. Temptation bundling. That's what you mean. I mean

1:19:06 It strikes me that A lot of the experiments you've done required Finding groups of people and then testing them Methodically and then putting rigor to some things that were maybe a little amorphous and whatnot so that the

1:19:19 the academic community would accept them as rigorous enough to be its own department and ultimately win a Nobel Prize. And At the end of the day. That seems like

1:19:31 those tests and experiments are so much easier now with social media, with the internet. But the ability to engage with huge populations of people. Is that true as the field Like sort of utilize that. I know you've cited eBay auctions in some of your papers.

1:19:49 I think the big thing as you know I took on a task, a kind of a weird task of Taking a book I wrote In nineteen ninety two And taking on a young co author and going back and saying

1:20:03 Did we make all that up or how does it hold up? How does it hold up? And It holds up. And uh

1:20:13 That We can go from the lab And now to the field. So We were talking about mental accounting. Here's a funny mental accounting result.

1:20:22 During the financial crisis Uh Price of gasoline fell. Like by fifty percent. So

1:20:32 What do people do? Now remember, it's a financial crisis, right? So people are tight for cash. But Their gasoline budget. is overflowing.

1:20:44 So They have a little compartment in their head that's for gas. They go, let's say they spend a hundred bucks a week. Uh the gas tank. And

1:20:55 Now it's fifty bucks. So what do they do? Well They start treating their car to occasional tanks of high test. Now that's really stupid. You know you're

1:21:07 Preus. It's not gonna do any better. With premium gas. With premium gas. You know, it's made to run on regular No matter what the Gasoline companies are telling you.

1:21:21 More expensive gas isn't better. For ninety percent of cars. But what they found was When the price went down They would

1:21:31 Buy more expensive gas. You know You and I would say if we're gonna do some mental accounting with that we say All right. We could upgrade the wine.

1:21:41 Yes. I always say that. That's always a lot of it. We would always do it anyway. But uh or the buy better olive oil. You know, instead of the store brand So The bigger picture is And that's kind of one of the lessons in this new book is All the stuff that we've found in thought experiments and laboratories now

1:22:04 Because of big data. You can find In the real world. And Like this paper

1:22:12 They had Data from millions of shoppers at a large Fox. Chain store. And so they could say they could show

1:22:21 Not only are they upgrading the gas, which is stupid. But they're not upgrading the orange juice. Or Purchasing in bulk to save money w during a crisis. Yeah. So that

1:22:34 I think You're right that there's It's much easier to run experiments now. And of course Companies are running these experiments every minute.

1:22:46 The largest economics department in the world is now at Amazon. Hundred PhDs in economics. Working at Amazon. Which could be good or bad for them. Uh

1:22:57 Well, if they're If they're the right stripe. Right? Yeah. Uh, I think they're getting pretty good economists. How many do you think

1:23:10 work and maybe the label of economists is too confining here, but in in terms of working with mass data sets in the real world. I say a palantir. I don't know if those numbers are public, but I would imagine they also have an entire army. Of people who are working on this stuff. Yeah. And you know, the mix of data scientists and a c some of them got their training in economics departments. So

1:23:35 Exactly what their training is. But there are people with the equivalent of PhDs in economics or computer science working at all these companies. To rewind the clock quite a ways, you've done a lot of amazing things in your career. I was looking at an interview with you.

1:23:57 On Nobel Prize dot org. And There's a line here I'd love for you to explain. My thesis advisor famously said when interviewed about me of my time in graduate school that quote, we did not expect much of him, end quote. So Why is that the case?

1:24:16 I was not The best. Grad student. In my class. And I wasn't in the best department.

1:24:23 I mean, actually I wasn't a great student. In any way. I certainly knew I was not the best. Grad student.

1:24:33 In my class. Why is that? You know, I was good in math, but not as good in math as the people who go to get PhDs in economics. And I was better at Noticing

1:24:49 The problems with economics Then You can think about it as You could be Somebody who

1:25:00 Can draw Perfectly. Or you can be somebody who Think of a different way of drawing? And I was more that guy.

1:25:15 So The only way I Managed To succeed, even get a job as an economist. And get tenure.

1:25:25 much less get a Nobel Prize, which was certainly never on my radar when I was a young person. was to think of a different way of doing economics. And I

1:25:37 More or less had to invent behavioral economics. To have a career. Otherwise I would have done something else. I was reading In preparation for this a bunch of

1:25:49 His old Source material papers. Like I've read Nudge, I read Misbehaving and all of these. And I went back to some of the source papers.

1:25:58 And I was literally laughing out loud. I mean, they were written thirty, forty years ago. And some of these same Problems in the same human nature shows up. Again and again and again. It's just a fascinating thing that within this entire academic

1:26:13 discipline for hundreds of years. No one said, Well, the Emperor doesn't have the clothes on this. And I think that's what you've done really, really well time and again. I always say that I never changed anybody's mind. What I was saying was

1:26:28 Heresy. It was the Emperor has no clothes. I'm thinking, you know, look, see that Mm-hmm. On his belly, you know, you can't see that and you're

1:26:40 Talking about The three piece suit? But Sarcasm doesn't really Convince people?

1:26:47 So The strategy I adopted At some point. I mean I had to write some papers, but the strategy I adopted to

1:26:57 broaden the field. I always say instead of changing people's minds, I would corrupt the youth. So One example of that Is

1:27:08 There's a foundation in New York called the Russell Sage Foundation. And they wanted to support behavioral economics. when we were just getting started and they gave us some money and they said, You can do whatever you want with it. And what we decided to do is start a two week summer camp.

1:27:28 That's not the official name, but everybody refers to it as the summer camp. So it's two weeks. We've got thirty grad students from around the world. Best students in the best departments. And We would

1:27:41 Teach them about behavioral economics. There are graduates from that. Graduates. I mean attendees. Alarms In the best economics departments around the world, they're editing journals now.

1:27:55 The new chairman of the Berkeley Economics Department. Was that one of those? And I think it's still the truth. That

1:28:04 People my age? They never got convinced. And it's the Thirty and forty year olds. The other thing I did

1:28:13 Was It was a new journal. Called the Journal of Economic Perspectives. And it tells you something about economics that this journal had to Be created.

1:28:25 Journal articles had gotten so arcane and technical. That The papers were not understandable. Unless you were in the subfield. So, you know, a macro economics paper was not understandable to a labor economist.

1:28:43 Or a finance professor. So they started this journal. And the idea was the articles would be written in a way that would be accessible to any economist. Or uh grad student or even advanced undergrad. My friend Hal Varian was the chief economist at Google.

1:29:01 He was an editor at this journal. And He and I were having Lunch one day and we had the idea They were gonna have some regular features.

1:29:10 And The idea was I would write A column in this journal on anomalies. So these were Pokes.

1:29:19 There was one um The endowment effect that we've talked about that Buy and selling prices are different. There was One about

1:29:28 The fact that Stocks that have gone down a lot. Do better than ones that have gone up a lot. So I I started writing this when I was about forty. And it's kind of an old man thing to do.

1:29:42 To Right stuff like that. Um There was a colleague of mine at Cornell Oh

1:29:49 I overheard Telling Somebody About this journal. Well I don't know whether articles in that

1:29:55 Journals should count. And I'm thinking And where what are they counting? Yeah, what are they counting? Right, right, right. Imaginary economist points. Right. Yes. You know, now There is something you can count, which is citations.

1:30:10 Citation is if somebody else writes an article and cites your article. Those are counted. And actually Publications in this journal. Get a lot of citations.

1:30:21 Because people read them. Because they're readable. Yes, they can readable. Because right. First idea. Write an article somebody can understand. Now it is the case that if the article is Too easy. We've mentioned my

1:30:39 Friends Conneman and Taverski were writing the Psychology articles that Inspired me a lot. A lot of people would look at those articles and say, You know, what's the big deal? There just wasn't enough rigor to them within the And it was seems like so obvious. So they have this idea availability.

1:30:57 That You're gonna think something is more likely if examples of it Come to mind. So ask people What's the ratio of homicides to suicides?

1:31:07 And they think like two or three to one. Turns out There are twice as many suicides as homicide. But suicides are quiet. And

1:31:17 I'm betting You know more than one person. Either directly or in your community. Who

1:31:27 It's a suicide victim. And the chances are you don't know any. Homicide victims. But nevertheless, you might give that same answer and the r obvious reason is That we read about homicides all the time.

1:31:40 And suicides are kinda quiet. So The thing is Their papers look too easy. I don't even know if you know this, Nick, but when I was

1:31:49 at Princeton undergrad. One of the many ways that I got together little bits of money here and there was by volunteering at mostly Green Hall. in the psychology department. I was a subject for some of Danny Codeman's studies.

1:32:07 So you were there when Danny was teaching there? I was. Did you take a class? I did not take a class with him, which is one of my great regrets. That was a bad move, Tim. Well next time, get that right. Exactly.

1:32:22 And people may recognize the name. popularly from thinking fast and slow. Um, which has been recommended by presidents and so on, but why is he so notable? What did he do or show or explain? That Made him.

1:32:41 So noteworthy. So the early work was done jointly with Amos Tversky. And I mean they are They are the reason why you're talking to me. Because

1:32:53 I had that list of weird behavior. But I didn't know what to do with it. And then I went to a conference and one of their students This is back in the seventies. One of their students.

1:33:07 Was telling me about the work they were doing. And I went back home and Read a bunch of their papers. Which you had to do by going to the library and finding

1:33:20 The psychology section in the library. Which I had never been to. And A big light bulb went on. And the light bulb was

1:33:30 The It's the phrase systematic bias. So Let me explain. To an economist, if people make a mistake.

1:33:40 That's no big deal. Because fine, they'll admit. And in fact If you give economists like a half a Glass of wine, they'll admit.

1:33:50 Even Traditional economy. That most of the people they know are idiots. And certainly Certainly their students and their spouse And their dean

1:34:04 And The president of the university and Actually here there's a funny story about Amos. Amos and I are at this conference. And

1:34:15 There's a An economist. At dinner. And he starts Going into this rant about

1:34:24 Amos had set him off and said How's your wife's decision making? And the guy starts telling stories. And then Then Amos asked him about The president of the university and the president of the time, I don't remember who it was.

1:34:38 And We're getting like this half hour long Rant about The irrationality of all these people. Right. Yeah.

1:34:48 It's like Amos is having him walk the ledge. Ha. And then pulls it out. It says so.

1:34:57 So let me s let me see if I can understand this. So Basically Everybody you know you think is dumb. But The people in your models are all brilliant.

1:35:09 So So that's the systematic bias. That yeah, and the systematic bias is like back to the availability we were talking about, right? So The fact that I can ask you a question Or homicides.

1:35:25 Or suicides, which is more common. I can predict that. And that's a mistake. And it's not a random error. So it's not That people are

1:35:36 Dumb. You know, I don't really think people are dumb. I think the world is hard. But People deal with this hard world.

1:35:45 Using shortcuts. And so forth. And the shortcuts are useful. But not perfect, and they lead to predictable mistakes. Like the sunk cost fallacy.

1:35:57 The more you paid For The Play you were gonna go to The less willing you are to skip it, no matter how good the alternative is.

1:36:10 A friend you haven't seen for twenty years. Calls and says My flight got canceled. I'm in Chicago tonight. We bought tickets. The day I started talking. This is really true. We bought tickets to a movie. With the kids that they wanted to go to.

1:36:27 And I went on Fandango, bought the tickets. I don't like superhero movies. It was some superhero movie. And I did not want to go. I would have easily paid. $150 to not go. At at nine in the morning. Then I bought the tickets.

1:36:41 And It was pouring rain outside at like six o'clock and Everyone's looking at each other and they're comfortable on the couch and everyone's like, do you really want to go out in this? I was like, We are going to that damn movie.

1:36:53 Like how c can you not Like and I literally that moment I went. We are putting deposits down on every damn person that goes to the aviary. I literally and I walk in and like

1:37:04 My CFO was like this is what I was talking about. Oh, you didn't go to the movie. We did go. Yeah, and I hated it. You didn't know me then. You know, now but it is absolutely true that that is a real thing that we all succumb to. So that was The big idea from Conneman and Traversky. And by the way. Everybody knows Michael Lewis and Moneyball and Many of his other books.

1:37:30 Like the big short, my favorite movie. People don't realise I have a cameo in that movie. But uh it's not the one with Margot Willby. But an amazing book Michael wrote was about Conneman and Tversky. Called the undoing project.

1:37:48 And I kept telling him. You can't write a book about two psychologists Talking to each other. But He's an amazing writer and it's an amazing story. So if you're curious about

1:38:02 Those two people who are Two of the greatest twentieth century scientists. I recommend that book. It's an easy read and Can we bring up a difficult subject? Is there anything I could do to stop your

1:38:18 No. Oh, okay. Um, bring it up. Yeah, we can always edit it out. Yeah, no, I mean look I I say it with Respect, but you know, so it became public.

1:38:28 I guess earlier this year, and I literally just found this out a couple of hours ago. that Danny chose assisted. Suicide. And I've known that for a little while. But

1:38:39 As a friend, as a mentor that had to be incredibly difficult and something to struggle with. When he told you that he was going to do this. Furthermore, he wasn't

1:38:50 Actually tremendously ill or anything like that. Are you comfortable talking about that a little bit? He had been uh friend and mentor. He was my best friend for

1:39:01 Forty years. Yeah, he Calls me one day and says Ah, that's it. And He had just turned ninety.

1:39:10 And Іногів was that Our memory of an experience is determined by two factors.

1:39:24 The Peak and the end. So You go to one of those meals At a three star restaurant.

1:39:33 What was the best thing? That's the peak. And how was it at the end? I think those restaurants don't get the end part right because they give you too much food.

1:39:44 But anyway. Danny was concerned he took this part seriously and he was mostly He didn't want To lose control. At ninety, I can tell you he was still the smartest guy I knew.

1:39:59 He had lost nothing. So we spent a week or so Arguing. And I thought I was winning.

1:40:09 And he said, Okay. You're getting annoying. So I Flew to New York. I was

1:40:16 In California. I flew to New York. Took him out for a good dinner. Bought him a bottle of wine. Nineteen ninety eight La Mulin. That I thought.

1:40:27 This is worth living for. So That was my attempt. I Wasn't allowed to try and argue with him anymore. Probably put the kibosh on that. So no arguing.

1:40:38 But we Went out to dinner together. He did think the wine was Good, but wasn't gonna change his mind. And then the next day we spent Just

1:40:49 Figuring out how to manage the next month or so. And our goal was The The OBIT Weren't about the way he died.

1:41:01 And they weren't. And they weren't. Until that came out. Yeah, and then a year later there was an article in the Wall Street Journal I think the writer shouldn't have included the letter he sent uh the email he sent to friends, but

1:41:17 Anyway, I mean Danny had great ninety years and he was great up until the end. And I would have liked A few more. But I respected

1:41:28 The right uh And to end the way I kept sending him email saying You know, tell me how the chocolates are in Switzerland, but it Yeah. Didn't reply.

1:41:41 Richard, what was his argument for doing it. Did he feel like he was slipping? Did he want to Just head that off at the pass. All together.

1:41:53 He wanted to be able to decide when He was gonna do it. And his argument was yes, he realizes That It's premature.

1:42:05 But it would be premature. Whenever He decided to do it. And so he's gonna do it now. And

1:42:18 I will say like the last month of his life might have been his happiest. So maybe he got it exactly right. Yeah. Went to Paris for two weeks. With his partner.

1:42:33 And then his Israeli family, his daughter Lives in Tel Aviv and She and

1:42:41 Her family Came and spent the week with him in Paris, which is where He grew up as a kid. Then he went off to Switzerland. So

1:42:51 I'm a greedy man. I would have liked A few more, but I Had forty five years, so That's pretty lucky. Yeah. And we won't I won't spend too much more time on this, but I am

1:43:02 Curious, what was his Belief around Death. Was it lights out, that's it? Just like before you were born? Was it something else? Was he afraid of dying or did he not have a fear of it? I think he had no fear of it. He

1:43:18 Didn't want Two go through a phase where you F

1:43:28 Faculties and You explained to me when you first told me about this. Because I think there is this innately human thing which you know, Tim is reacting to as well, and I certainly did, which is We are so ingrained.

1:43:41 To Protect. Life. And the life of ourselves and others. That we love.

1:43:49 No matter what. And He feared The cognitive decline, the thing he valued the most was wrestling with ideas. And you told me that he fear that more.

1:44:01 And the control over how that ended. than anything else. Yeah, I think it's not like he was Worried about No longer being the smartest guy in the room.

1:44:13 As much as he thought That He might be slipping and then who would I mean My intervention.

1:44:22 And my attempt at an intervention was To create A group. Of people he loved and trusted. To say, all right.

1:44:34 When Certain Steps. Are there We buy you the ticket.

1:44:43 But he wanted to be the one who Got to decide when that was gonna be. And And that was With all his facilities. And so that was it.

1:44:53 Thank you, Richard. We can shift gears, but thank you for being willing to share that. I mean I was Taken aback when I read the piece. And have just been Very very curious as someone who is In the same hallways, but never took a class, which is a real shame on my part.

1:45:09 In any case. Thanks for being willing to talk about that. What keeps you going, Richard? Like what gets you Excited. There's a transition to No, no not saying you should buy it to Switzerland. I'm just saying what what is it that gives you the feeling of aliveness? Is it the wrestling with ideas? Is it something else? Is it corrupting the youth in productive ways? Yeah, and

1:45:33 You know, I think it's a very important thing. I took on this Possibly wacky. Rewriting a book I published in nineteen ninety two.

1:45:45 About those anomalies columns. And Part of that was There's something in Psychology called the replication crisis?

1:45:55 That there are are some experiments that just don't replicate and There are some people that have been Proven just to have made stuff up. And I wanted to

1:46:08 See whether the stuff we had built everything on Could stand scrutiny? So I corrupted a young colleague of mine, Alex Emis. Who just turned forty. And

1:46:22 We Took some of those old things, two pieces I wrote with Danny and one with Amos, and then some others. And then Gave it. The hard look. Does this hold up?

1:46:35 Is it true out of sample? Is it true In the real world. And That's what Keeps you be thinking. I also like I like that in the book.

1:46:46 at the end of every one of these chapters where they go through the rigor of updating it and seeing if it holds up. They also say For the economist. And it's like one sentence. Here's your takeaway if you're an economist. And then it's like for everyone else. Here's one sentence that's a takeaway.

1:47:01 You can read the whole book. But you could also read those and get an awful lot out of it, which is really good because those conclusions are the nuggets that kind of propel the book forward, I think, as well. The way we run it is Yeah, take away for humans.

1:47:16 And For economists. We don't say whether we think economists are not humans, but Well, that that actually uh preemps in a way my question, but I'll ask it anyway. Who is this book for? Who's the reader?

1:47:31 You know, I think We Tried very hard to write it. In a way It's not a thriller.

1:47:39 And it's not a self help book. But I don't think it's As hard as thinking fast and slow? Which was

1:47:49 Uh Tough. I mean it it's a great but it's dense. And it's This book is much funnier than that.

1:47:57 But I think Corrupting the youth is always On my mind.

1:48:05 So I'm giving a series of talks at universities. So I have a trip next week, Cornell, Penn and Princeton. So your alma mater, I'll be there in Green Hall. I

1:48:18 Like Interacting with the young people. I'm Officially when Emeritus July one.

1:48:25 So I'm not teaching But I still You know, I divide my time between Chicago and Berkeley I still Like

1:48:34 Going to workshops? And Interacting with my colleagues. And Having them sharpen me.

1:48:43 I mentioned this. Thaler when we When we were on our way here, is that I was Struck by the fact that these

1:48:51 Anomalies were pointed out. Thirty, forty years ago, something like that. And Every single one of them. I could think of an example.

1:49:01 Of A person or myself or a business. That fell victim to one of these Issues, if you will.

1:49:10 And so It almost like shines a light on our own As you were saying, cognitive biases. In a way that take something that's a little squishy, like you know, psychology and this and that.

1:49:22 And then just applies it to Something that impacts all of our lives. Markets. business, the way we conduct our own Households.

1:49:31 And that's so Very Basic way. And just for people, I'll give it the title again. I'll mention it also towards the end, but the winners curse behavioral economics anomalies then and now. Is this the subject matter, Richard, of the talks that you're giving at these various schools? Yeah.

1:49:46 So it's a Essentially it. A little book tour, but No point in going to bookstores. I'd rather have

1:49:53 Three hundred. Young students Minds to corrupt. Is there anything else, Nick or Richard? Well kick it to Nick first that you'd like to Cover with Richard before we

1:50:05 Wind to a close, or Richard, anything else that you'd like to mention, point people to, requests of my audience, anything like that. Yeah. That you'd like to mention? Nick, you want to go first? Yeah, I mean I was gonna ask

1:50:18 The Tim question. Which is What books, if you're new to understanding this. Topic of behavioral economics. Or even just traditional economics.

1:50:28 What are your favorite? Sources. Other than your own, of course. You've already mentioned um uh Danny's you know book, you know, and and all that. But there must be some that are kind of the foundational books that you go to or you you suggest to these young folks that you're trying to corrupt.

1:50:44 So yeah, one thing I mentioned In passing. So for the students And Just the general I mentioned this journal, the journal of economic perspectives. Most academic journals You can't get

1:50:58 That one is posted. Online. Anybody can read it. And if you're Modestly interested in economics. It's a fantastic journal. There's a guy called Timothy Taylor.

1:51:11 Who they hired brilliantly. They Call him the managing editor. I I call him the writing editor. And He quickly

1:51:19 adopted the strategy of taking your article and then just rewriting it. And he would say, you know, it's like in Microsoft Word with track changes. But The version you would get is the one His version.

1:51:33 And you could restore. But we know status quo bias works. And he's still at it. And so That's a fantastic place to learn about economics.

1:51:45 It's four times a year. Typically there's a symposium on some Topic. And it's a resource nobody knows about. And it's fantastic.

1:51:55 Yeah, I mentioned. Michael Lewis's book, The Undoing Project. And It's a great Insight into

1:52:03 Coneman and Toversky. And I think I'm not gonna mention any other books because Whichever one I mention I will piss off twelve other people. So I'm gonna I'll I'll I'll keep the friends I have. Well

1:52:19 Richard and Nick, thanks so much for taking the time today for a very wide range of conversation. There's a lot more that I could ask about, but since we're racking up some decent mileage on this conversation, I'll keep it to this duration for around one. And people can find uh the winner's curse. behavioral economics anomalies then and now which is co-authored with Alex is it imis am I saying that correctly and we'll link to that in the show notes. You can find Richard on X, the artist formerly known as Twitter at X.com slash R underscore Thaylor T H A L E R. And as usual, everybody, I will link to anything that came up in the conversation in the show notes at Tim.blog slash podcast. You can just search Thaylor T H A L E R. And Nick has been on the show, I think at least now.

1:53:09 This would be the third or fourth time. So if you want to delve into all the background on Nick, you have ample opportunity. Hey. Taylor, thanks for doing this. I really appreciate it. I always love spending time with you. Like great having having uh Tim here to uh make me sound better at asking questions. It is I will say to the audience, it is much, much harder what Tim does.

1:53:31 than to be a guest on the show. And so great respect to you because week after week I listen to your podcast and you do a wonderful job. Oh, thanks, man. Thanks, Nick. And we're overdue for an in person catch up. So I uh I look forward to making that happen. And I I look forward to meeting you in person as well.

1:53:48 That would be great. I do spend some time in Chicago. I also spend time occasionally in Norco. I got a lot of friends at Berkeley, so I would suspect. Well crossed. Yeah, I think we both know Michael Poland, right? Yep. Yeah. Yeah, absolutely. Yeah, I'm involved with the the the center there on a couple of levels. So lots of overlap. I really appreciate the time, guys. Thanks. And uh enjoy your dinner. I will talk to you guys. Thanks. Take care. Sounds good, everybody. Bye bye.

1:54:14 Hey guys, this is Tim again, just one more thing before you take off, and that is Five Bullet Friday. Would you enjoy getting a short email from me every Friday that provides a little fun before the weekend? Between one and a half and two million people subscribe to my free newsletter, my super short newsletter called Five Bullet Friday. Easy to sign up, easy to cancel. It is basically a half page that I send out every Friday to share the coolest things I've found or discovered or have started exploring over that week. It's kinda like my diary of cool things. It often includes articles I'm reading, books I'm reading. albums perhaps, gadgets, gizmos, all sorts of tech tricks and so on that get sent to me by my friends, including a lot of podcast guests, and these strange esoteric things end up in my field and then I test them and then I share them with you. So if that sounds fun, again, it's very short, a little tiny bite of goodness before you head off for the weekend, something to think about. If you'd like to try out, just go to Tim.blog slash Friday. Type that into your browser, Tim.blog slash.

1:55:18 Friday, drop in your email and you'll get the very next one. Thanks for listening. I don't know about you guys, but I've had the experience of traveling overseas and I try to access something, say a show on Amazon or elsewhere. And it says not available in your current location, something like that. I don't like it. And

1:55:38 A lot of you know I take privacy and security very seriously. That is why I have been using today's episode sponsor, ExpressVPN, for several years now. and I recommend you check it out. Also with the example that I gave of you can't access this content or that content, wherever you happen to be, then you just set your server to a country where you can see it and all of a sudden, voila. you can say log into your normal Amazon account that's supposed to be routed to.uk or whatever. And uh everything works. Express VPN is so fast also it doesn't bog things down at all. I usually forget that I even have it on. I can stream high quality video, no lag or buffering, even on servers thousands of miles away. ExpressVPN has really changed the way I use the internet, and I can't recommend it highly enough, so check it out. Right now you can go to expressVPN.com slash Tim and get four extra months for free when you sign up. Just go to ExpressVPN E-XP R E S S V P N dot com slash Tim for an extra four free months of ExpressVPN. One more time, expressVPN.com slash Tim.

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