Podcast Summary: Passion Struck with John R. Miles

Episode 716 – The Winner’s Curse: Why Smart People Lose Their Way | Guest: Alex Imas

Date: January 15, 2026
Host: John R. Miles
Guest: Alex Imas, behavioral scientist and professor, co-author of The Winner’s Curse with Richard Thaler

Episode Overview

This episode continues the "Meaning Makers" series, focusing on how even the most intelligent or successful individuals can make systematically costly decisions—especially under competitive, high-pressure environments. John R. Miles and guest Alex Imas unravel the behavioral economic phenomenon known as the “winner’s curse,” exploring why success inside distorted environments can be as misaligning as failure, and offering practical advice to help listeners make better, more meaningful choices.

Key Discussion Points & Insights

1. The Winner’s Curse: Definition and Daily Relevance

• Winner’s Curse Explained: Winning by overpaying, overcommitting, or overreaching—finding out too late that “victory” comes with hidden costs no one intended to accept.
• Classic Example: Auctioning a jar of coins—those who win tend to overbid due to overoptimism (25:05).
  • Quote: “The person who wins the jar is going to be the person who’s most optimistic, who’s most wrong in the positive direction. And that’s the winner’s curse.” — Alex Imas (25:55)
• Modern Examples: Corporate bidding wars, oil drilling rights, meme stock trading fueled by coordination on digital platforms.

2. Why Smart People Make Bad Decisions

• Mental Representation: Decisions are shaped by what features we focus on (07:06).
  • Example: People overemphasize weather when choosing between Michigan or California, ignoring other quality-of-life aspects.
• Dynamic Inconsistency: The gap between our plans and real-time actions, e.g., intending to cut losses on a stock but doubling down instead (09:10).
  • Quote: “What my research has shown is...they do the exact opposite of what they intended to do…They double down. They chase their losses.” — Alex Imas (10:34)
• Competition & Overconfidence: Environments like investing and corporate strategy amplify risks and overestimation of ability.
• Sunk Cost Fallacy: Commitment to a losing course simply because of past investment (49:32).

3. Technology and the Amplification of Bias

• Digital Environment: Behavioral biases are not new, but digital access and AI have magnified their scale and impact (11:22).
  • Online Gambling Explosion: Increased bankruptcy rates as online casinos exploit psychological vulnerabilities.
  • Quote: “Firms are very well aware of the biases people have because they have full control over the information and the environment…they could construct these algorithms in a way that really exploits these biases on a scale we haven’t seen before.” — Alex Imas (12:20)
• Future of AI: Two possible futures—AI as a force for decision-making aid, or as a hyper-personalized tool for first-degree price discrimination and exploitation (12:48).

4. The Evolution of Behavioral Economics

• From Classroom to Real World: Early skepticism dismissed lab-based findings as irrelevant to high-stakes professionals; field studies now show the same biases affect CEOs, executives, athletes (19:33).
  • Quote: “The types of things that we studied with these college students, they show up with CEOs of major Fortune 500 companies with people with real money on their line making decision after decision.” — Alex Imas (20:00)
• Big Studies, Broad Impact: Projects like “Behavior Change for Good” enable mega-studies for more durable insights.

5. Behavioral Science in Commerce & Policy

• Behavioral Science in Practice: Companies like Lowe’s, PNC, Amazon, have used behavioral economics (sometimes before it was a named discipline) to shape customer experience, streamline choices, and, at times, nudge toward profitable behaviors (22:46).
• Digital Coordination in Markets: Reddit’s WallStreetBets and Robinhood have redefined retail trading, increasing the persistence of bubbles by allowing mass coordination (28:11–30:38).
  • Quote: “What Wall Street Bets allows people to do is to say, ‘Look, we’re gonna all hold onto this…’ That bubble can go on for much longer…” — Alex Imas (29:55)

6. Behavioral Classics in the Digital Age

• Loss Aversion: Remains robust even with digital assets and NFTs—people’s valuation of digital art increases simply by being told they own it (33:14–34:45).
• Fairness, Cooperation, and Punishment: Fairness norms are vital for collective trust and cooperation; people will even pay a cost to punish norm violators, maintaining social order (35:18–38:51).
  • Quote: “Without the ability to punish people who violate norms, cooperation just completely went to crap.” — Alex Imas (38:51)

7. Nudges, Ethics, and Manipulation

• Libertarian Paternalism: Nudges alter choice architecture without restricting freedom (e.g., default 401k opt-in), but raise ethical questions (39:43–41:30).
• Corporate Nudging: Amazon, for example, runs thousands of A/B behavioral experiments to optimize sales (42:24).
  • Quote: “Firms have been doing this since the beginning of capitalism. It’s just now it’s on a completely different scale.” — Alex Imas (44:10)

8. AI, Social Desirability, and Digital Bias

• Underreporting AI Use: Social desirability bias leads students (and possibly professionals) to understate their use of AI tools. When asked directly, 63% of students say they use AI; when asked about peers, it jumps to 95% (45:13-46:17).
  • Quote: “That gap…that is the gap that people are misreporting their AI use essentially.” — Alex Imas (45:31)
• Learning Risks: Overreliance on AI or search results weakens retention and depth of understanding versus slower, manual research (48:03–49:17).

Memorable Quotes & Moments

• On Sunk Cost Fallacy:
  “If I hadn’t paid money to invest in this stock, if I hadn’t taken that one class in that topic, would I still do that next thing? If the answer is no, stop.” — Alex Imas (49:32)
• On Deliberate Decision-Making:
  “Fast decisions are not necessarily good decisions...decisions are better if we think harder, we cool off, the emotions wear off and we can consider all of the options.” — Alex Imas (50:51)
• On Living a Passion Struck Life:
  “For me, living a passion struck life is to keep my mind open, to read, to say yes all the time instead of saying no…make the time and do it.” — Alex Imas (51:18)

Practical Tools for Listeners (49:32, 50:08)

1. Beware the Sunk Cost Fallacy: If you wouldn’t start again, don’t continue “just because you’ve already started.”
2. Don’t Argue the Unlikely: Let go of arguments/worries about things with very low probability.
3. Take Time to Deliberate: Pause and cool off before making big decisions—use “system 2” thinking.

Timestamps for Key Segments

• What drew Alex Imas to decision-making: 04:58
• Mental representation of choices: 07:06
• Dynamic inconsistency and risk: 09:10
• Behavioral biases and new tech: 11:22–14:49
• Origin and update of The Winner’s Curse book: 15:21–17:10
• Practical tools to improve decisions: 49:32–51:12
• Living a Passion Struck life: 51:18

Where to Learn More

• Alex Imas: aleximas.com & @AlexImas on X/Twitter (52:18)
• The Winner’s Curse: winnerscurse.org
• Reflection tools and series resources: theignitedlife.net

Final Takeaway (52:52)

“Meaning isn’t about accumulating wins. It’s about choosing what can be sustained without distortion.” — John Miles

This episode is a must-listen for anyone seeking to understand the hidden traps in decision-making—especially those that arise in environments engineered to reward escalation over discernment. Full of relatable stories, research-based insights, and actionable advice, it offers a blueprint to recognize and resist the winner’s curse in all areas of life.