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The Winner's Curse: Paradoxes and Anomalies of Economic Life By Richard H. Thaler ( Princeton University Press )
Release Date: 1994-01-10
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List Price: $27.95
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Product Description
Richard Thaler challenges the received economic wisdom by revealing many of the paradoxes that abound even in the most painstakingly constructed transactions. He presents literate, challenging, and often funny examples of such anomalies as why the winners at auctions are often the real losers--they pay too much and suffer the "winner's curse"--why gamblers bet on long shots at the end of a losing day, why shoppers will save on one appliance only to pass up the identical savings on another, and why sports fans who wouldn't pay more than $200 for a Super Bowl ticket wouldn't sell one they own for less than $400. He also demonstrates that markets do not always operate with the traplike efficiency we impute to them.
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 Very good seller. Shipped Quickly. Product in Great Condition.
The seller was prompt and the product was like new. What else can you ask for? Great transaction.
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Very interesting ( verywildgeese )
It gives you a great overview of some of the strange inconsitencies in human behavior. It is more than just a finance book and has many interesting stories that you can talk about with friends later.
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 Behavioral economics for the real world.
The "Winners Curse" is a book about behavioral economics. It applies experimental human psychological studies to economic behavior. It consists of 14 chapters, each devoted to a different "anomaly" in economic behavior. The term anomaly is used by the author to denote behavior that runs counter to the assumptions of most theoretical economic models, which assume that people act in a rational and greedy manner. To me (not an economist), that anyone would base a theory on the assumptions of rational human behavior and that people are always greedy (seeking the maximum economic gain) is a bit irrational. It does not come as a surprise to me that people act irrationally and that they can sometimes act for the common good, instead of seeking maximum personal gain.
Each chapter starts with a brief hypothetical problem. Some are based on real problems, (such as playing the lottery, betting on horses, the calendar effect on stock market prices, foreign currency exchange problems, ...) or based on model games, (such as bargaining games, games where cooperation is required, auction games,....). The results of these experimental games and the statistical data on human behavior in real situations (such as stock market purchases) are then compared to the predictions of the theoretical models that assume rationality and greed. The point of the book is that it can be experimentally shown that people act irrationally (from an economic perspective) and can act in a manner that does not seek the maximum personal gain. The author does not believe that this spells the end for theoretical economic modeling, only that more psychological input is required.
This book is interesting, but in my opinion it is neither fish nor fowl. I do not think that it is rigorous enough to satisfy an economist, but is somewhat too complicated in spots for general readers. After the general statement of the problem there is a discussion of the experimental data that bears on the problem. This discussion can be hard for a non-economist (me) to follow at times. That said, I enjoyed book and got a lot of interesting information from it. I learned why it is sometimes a good deal (yielding a positive expected value) to play the lottery and what the most commonly chosen numbers are. The author also points out that this does not mean that you will win, only that if you and your descendants played at the correct times for a thousand years or so, you would eventually make more than what you would spend on tickets. In some situations it is thus favorable to buy tickets covering all the possible combinations, but you would need millions of dollars and a way to physically buy millions of tickets. I learned the best days to buy or sell a stock (at least statistically on which days the market tends to go up and on which it tends to go down).
By the way, the Winners Curse refers to the winner of an auction being cursed because the price paid was too high. I learned that with many bidders it is best to lower the maximum price that you are willing to pay. Unfortunately, doing this means that you will seldom get the item, but when you do succeed you will not be cursed by paying too much.
All in all, stick with it. If necessary, skip over some of the discussion of the experimental data and go to the concluding remarks for each chapter. I found it to be worth the effort.
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Highly Recommended! ( rolfdobelli )
We highly recommend this classic of economic literature, one of the first (more or less) accessible presentations of the evidence against economic rationality. Economists have assumed, conventionally, that economic choice rests on a foundation of rationality. For instance, economists tend to think that people will put the same value on two mathematically identical offers. Yet laboratory experiments have proven what everyday experience suggests: people are not quite rational. Author Richard H. Thaler, a founding father of behavioral economics, presents convincing exhibits to make the case that the assumption of economic rationality is an awfully big pill to swallow. Stylistically, his book strikes a neat balance between accessibility and obscurity. A reader will need a certain amount of schooling in economics and a great deal of patience with academic prose to wade through every word of every chapter, although the payoff is substantial. However, it is possible for the impatient reader to get the gist by reading the introduction, the first page or two of each chapter and the epilogue. And even that is eminently worthwhile.
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 by an economist, for an economist ( ryan_coleman138 )
as an amateur economist grown increasingly dissatisfied w/ the failures of available theories, i was hopeful that this book would expound more on why markets fail. in some ways it did (in a very drab and boring language), although its coverage of financial markets (my interest) was all too brief and incomplete---the coverage of losers' outperformance of winners in equities was by far (IMHO) the best section of the book, but as good as that section was, the coverage of foreign exchange fluctuations was a failure. ---soros did a much better job of this.there is some good material in this book, and i would give it 3 stars as a result, but the writing style makes it simply too inaccessible for the average reader. better financial market focus can be found in "reminisces of a stock operator" and "alchemy of finance", which really were accidental breakthroughs in behavioral finance (particularly the former--a gem of a book). rhyno
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