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

Summary

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

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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.

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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.

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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).

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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).

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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.

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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)

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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)

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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)

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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).

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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)

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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.

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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

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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

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Final Takeaway (52:52)

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

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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.

Transcript

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[John Miles]

Coming up next on Passion Struck, don't.

[Alex Emis]

Succumb to the Sunk Cost Fallacy. So the sunk cost fallacy is this.

[Alex Emis (continued or alternate voice)]

Idea that I've already done something, I've.

[Alex Emis]

Already gone down this path, I might as well keep going.

[Alex Emis (continued or alternate voice)]

Even though it's looking like a bad.

[Alex Emis]

Decision, don't succumb to that sunk cost fallacy. Always take a moment think is the next step. If I hadn't gone into this decision to begin with, if I hadn't paid money to invest in this stock, if I hadn't taken those that one class in that topic was would I still do that next thing? If the answer is no, stop.

[Alex Emis (continued or alternate voice)]

Do something else.

[Alex Emis]

Just this is one of the most.

[Alex Emis (continued or alternate voice)]

Important things that behavioral science has taught us.

[John Miles]

Welcome to Passion Struck. I'm your host, John Miles. This is the show where we explore the art of human flourishing and what it truly means to live like it matters. Each week I sit down with change makers, creators, scientists and everyday heroes to decode the human experience and uncover the tools that help us lead with meaning, heal what hurts, and pursue the fullest expression of who we're capable of becoming. Whether you're designing your future, developing as a leader, or seeking deeper alignment in your life, this show is your invitation to grow with purpose and act with intention. Because the secret to a life of deep purpose, connection and impact is choosing to live like you matter.

[Alex Emis]

Foreign.

[John Miles]

Hey friends, and welcome Back to episode 716 of Passion Struck. We're continuing our series the Meaning Makers, where we're examining how meaning is formed, protected, and sometimes distorted in modern life. In our last episode On Tuesday with Dr. Steven Sloman, we explored how beliefs form and how certainty, when left unexamined, can quietly narrow our thinking and distort our sense of meaning. Today we take the next step because even when our beliefs feel solid, the real test of meaning shows up in the choices we make under pressure. My guest today is Alex Emis. Alex is a behavioral scientist and professor whose work examines how people make decisions in competitive, high stakes environments, especially when the desire to win quietly distorts judgment and obscures cost. He is the author of the Winner's Curse, written with Nobel laureate Richard Thaler. Our conversation centers on a powerful idea known as the winner's curse, a phenomenon where people win by overpaying, over committing, or overreaching, only to discover later that the victory itself carried structural costs that they never intended to accept. What makes this so relevant to meaning is many lives aren't misaligned because of failure. They're misaligned because of success achieved inside distorted environments. In this episode, we explore why capable people make systematically costly decisions, how our environments shape choices more than intentions, why competition amplifies overconfidence and risk, and how recognizing the winner's curse can help us build success that actually holds. Before we dive in, a quick note on a project that mirrors these themes of inherent worth my new children's book, you, Matter Luma is a bridge to that truth, a reminder that your significance isn't earned by your performance. It's a fact of your existence. You can pre order it now at Barnes and noble or umatirluma.com if this episode resonates, please share it with someone navigating a similar season. And if you haven't yet, a five star rating or review on Apple Podcasts or Spotify helps these conversations reach the people who need them most. You can catch the full visual experience on our YouTube channels, Passionstruck clips and John R. Miles. Now let's continue the Meaning Makers with Alex Emis. Thank you for choosing Passion Struck and choosing me to be your host and guide on your journey to creating an intentional life. Now let that journey begin.

[Interviewer/Host]

I am absolutely thrilled today to welcome Alex Emis to Passion Struck. Welcome Alex.

[John Miles]

How are you today?

[Alex Emis (continued or alternate voice)]

I'm doing great, John. Thank you.

[Interviewer/Host]

I'm so excited to have you on the show. For the listeners, if you don't know who Alex is, he's earned the Sloan Research Fellowship, multiple Rising Scholar awards, and is widely published. Alex, what first drew you to studying decision making? Was there a formative moment that made you question why people act so differently from what theory predicts?

[Alex Emis]

I was drawn to decision making very.

[Alex Emis (continued or alternate voice)]

Early on in college.

[Alex Emis]

Actually, the first time I was drawn.

[Alex Emis (continued or alternate voice)]

To it was from the perspective of abnormal psychology. So I was drawn to decision making, like thinking about cases when things really go wrong. So schizophrenia, bipolar disorder, and I've always.

[Alex Emis]

Just been fascinated by the different ways that people make decisions. You get into your own head assuming that everybody Acts the way that you do. And as I met more people, made more friends, I realized, wow, people, so.

[Alex Emis (continued or alternate voice)]

Many people think so differently than I do.

[Alex Emis]

And I was just fascinated by that. All of this, these different perspectives, all.

[Alex Emis (continued or alternate voice)]

Of these different minds going out there and making decisions.

[Alex Emis]

While I was taking abnormal psychology and psychiatry courses, I was also taking economics courses.

[Alex Emis (continued or alternate voice)]

And I was an economics major and doing in a pre med program.

[Alex Emis]

And in economics, I was struck by the fact that the assumptions in economics were basically the opposite of that, was that everybody thinks exactly the same and everybody might have different preferences, but the basic idea that everybody has correct beliefs, everybody maximizes a utility function. You might care more about risk than I do, or you might like apples or oranges more than I do, but for the most part, people are very similar. And when you get to the macro.

[Alex Emis (continued or alternate voice)]

Models, people are like literally the same. These are like representative agent models.

[Alex Emis]

So I was just struck by the fact that, wow, my classes about real human people are very different than the.

[Alex Emis (continued or alternate voice)]

Economic classes that I'm taking at the same time.

[Alex Emis]

And I was just very fascinated by that fact and wanted to figure out how I can bridge those two things together. And that's how I found behavioral economics.

[Alex Emis (continued or alternate voice)]

And dove right in once, once I discovered it.

[Interviewer/Host]

Well, a lot of what I talk to people about on the show is the power of our choices. And I remember doing an interview a number of years ago with Michelle Seeger from Michigan, and we were talking about the power of microchoices. And I understand you study how people mentally represent choices. What does it actually mean to represent a decision in the mind?

[Alex Emis]

A mental representation is essentially what you think you're facing. So let's say you decide to open up a bank account. So what does that mean? You look at the amount of money that your deposit will grow by, you look at the minimum deposit, you look at fees, all of these sorts of things, and then you make a decision whether to go with that bank or a different bank. A mental representation is basically how do I take all of those different features and how do I represent them in my mind? So some people, for example, completely ignore overdraft fees. Like they don't even consider them. That's not in their representation of the decision that they're facing. And so when you're choosing to buy a stock or not buying a stock, when you're forming a portfolio, when you're thinking about a job to get. So one classic kind of example is like people from Michigan vs. People from California were asked, people are about to.

[Alex Emis (continued or alternate voice)]

Go to college, where do you think they'll be happier.

[Alex Emis]

And their mental representation was all about the weather. The majority of their decision was, where's the weather?

[Alex Emis (continued or alternate voice)]

Better?

[Alex Emis]

And in California was a lot better. In Michigan, people thought, wow, people in California must be so much happier. And turns out if you actually measure people's happiness, it's not. There's not much of a difference between the two places. What were people missing? Well, when you move to California, there's something called traffic. There's something called all of the inconveniences that come from living in Los Angeles. And that's just not in people's representations of that decision. And when it's not in the representation, you don't take it into account and make wrong forecasts. You make the wrong decision and potentially.

[Alex Emis (continued or alternate voice)]

Make some mistakes if you're missing something in your representation.

[Interviewer/Host]

Well, thank you for sharing that. Such a fascinating body of work and something I'm extremely interested in, as is the topic of risk. And I understand that you've researched and written a lot about dynamic inconsistency, which is really gets into the handling of how risk diverges from actions in real time. And I understand there's a gap that can emerge. How does that gap relate to this dynamic inconsistency?

[Alex Emis]

Dynamic inconsistency is a very general property that basically means, look, I plan to do one thing and I don't do it. It's the idea that I have a goal, I want to work out, I want to lose weight, I want to get healthy. And then you say, all right, in order to do that, I need to go to the gym, I need to.

[Alex Emis (continued or alternate voice)]

Have a good diet, and these are the types of things I need to do.

[Alex Emis]

And then you make a plan, you write it down, you do whatever you need to do.

[Alex Emis (continued or alternate voice)]

You buy a gym membership, you make.

[Alex Emis]

A nice little plan for yourself to meet the goal. And then when the time arrives to actually do that thing, you don't do.

[Alex Emis (continued or alternate voice)]

It, you do something else.

[Alex Emis]

In the case of risk, what my research has shown is that when people start taking on risk, they essentially really like these kind of low probability high win gambles.

[Alex Emis (continued or alternate voice)]

So like when I'm thinking about forming.

[Alex Emis]

A portfolio or buying some stocks, I have a plan for how I'm gonna hold those stocks. Essentially what my plan is. What? Look, if the price goes up, I'm going to hold onto it. If it goes down, I'm going to.

[Alex Emis (continued or alternate voice)]

Sell it right away.

[Alex Emis]

That plan generates risk that kind of looks like a lottery because the downside's eliminated, but the upside is like essentially.

[Alex Emis (continued or alternate voice)]

Infinity or not infinity, but a very large number.

[Alex Emis]

So that's what people plan to do. What do they actually do? Turns out they do the exact opposite of that. When the stock goes up or their portfolio goes up, they're like, oh, man, I just made some money. Let me cash that in and buy.

[Alex Emis (continued or alternate voice)]

Something or buy something else.

[Alex Emis]

Whereas when they start losing, what do they do? They think, oh, man, I'm in the hole. I got to get out of it. I better hold on to it. I better put even more money into it. They double down.

[Alex Emis (continued or alternate voice)]

They chase their losses.

[Alex Emis]

So basically, what does their portfolio look like? What does their ownership look like? The opposite of what they intended to do.

[Interviewer/Host]

Well, one of the things that really interests me is taking this whole idea of decision making and looking at it now. In the world that we live in, where digital technology and AI has become so pervasive, what new behavioral patterns or biases are you seeing as humans are adapting to machines? Or it could be our algorithms are adapting to our irrationalities, depending on how you look at it.

[Alex Emis]

I don't think there's any new psychology out there. The past 10 years, 15 years, has.

[Alex Emis (continued or alternate voice)]

Not been long enough for us to develop any new biases or psychology.

[Alex Emis]

What we're seeing is a lot of the biases erupt on steroids. So we're seeing people double down and risk a lot of money on the fact that now the casino, they don't need to drive to it. It's on their phone. So we're seeing a huge explosion of bankruptcy cases all over the states, all over the world. Like online sports gambling has been legalized all over America.

[Alex Emis (continued or alternate voice)]

It's also been legalized in places like Brazil.

[Alex Emis]

Brazil. The government is now dealing with the fact that something like 25 or 30% of people's welfare assistance is being spent.

[Alex Emis (continued or alternate voice)]

On sports gambling and things like that and getting people into debt and getting them into bankruptcy, and basically people are losing all of their money.

[Alex Emis]

So that's just one example where access to digital technology, where firms are very.

[Alex Emis (continued or alternate voice)]

Well aware of the biases that people.

[Alex Emis]

Have because they have full control over.

[Alex Emis (continued or alternate voice)]

The information and the environment that people.

[Alex Emis]

Are in when they're making decisions. They could construct these algorithms in a.

[Alex Emis (continued or alternate voice)]

Way that really exploits these biases on a scale we haven't seen before.

[Interviewer/Host]

What do you think the next evolution of that is going to be? We've already seen it being used to disrupt political races. We're seeing used in warfare tactics. We're seeing it used by influencers. Where do you see this going?

[Alex Emis]

We're at a Crossroads where there's one path where artificial intelligence can be really.

[Alex Emis (continued or alternate voice)]

Be a force for good.

[Alex Emis]

This is a similar crossroads we had.

[Alex Emis (continued or alternate voice)]

With information technology in the late 90s.

[Alex Emis]

Where, you know, you had access to the Library of Alexandria times a hundred, right? All of the information in the world at your fingertips. Theoretically, we could be in a utopia right now where everybody knows their biases and heuristics and they have all of.

[Alex Emis (continued or alternate voice)]

The information in the world to solve them. They have governments and or firms that create apps for them to make better decisions, they're saving money for retirement, all of these sorts of things.

[Alex Emis]

We could have been, that is a world that's not the world we ended up with.

[Alex Emis (continued or alternate voice)]

The reason we didn't end up with that in that world is because there's.

[Alex Emis]

A lot more money to be made by exploiting biases than just solving them, these biases. We're at a similar crossroads right now with AI. We have a situation where you can have artificial intelligence basically act as an agent for you, act as a decision aid for you on a scale that.

[Alex Emis (continued or alternate voice)]

We'Ve never been able to reach before, because these are completely personalized things that know your biases, know your heuristics and can really make help you make better decisions.

[Alex Emis]

But on the other hand, we could have AI just basically allow firms to.

[Alex Emis (continued or alternate voice)]

Engage in first degree price discrimination, which.

[Alex Emis]

Is basically all of the consumer surplus we get. We learn that we get in Econ 101 because firms can't engage in first price indiscrimination. Now firms can be as they, through.

[Alex Emis (continued or alternate voice)]

These AI machine learning algorithms, they have.

[Alex Emis]

All of the data on every single individual to allow them to target them with specific prices. So we can get into that world too. We can see the emergence of first.

[Alex Emis (continued or alternate voice)]

Degree price discrimination on a scale we've never seen before.

[Alex Emis]

We can have an emergence of misinformation of people not really knowing what's real.

[Alex Emis (continued or alternate voice)]

Out there, or we can have something quite different where AI actually helps solve all of these problems.

[Interviewer/Host]

So obviously with all the changes that are hitting us, this is a completely different world in behavioral economics, just as it is in every other dimension of our lives. So I thought it was pretty interesting that a winner's curse came about. I understand it over 30 years ago, but you have co authored a new update to it with Nobel laureate Richard Thaler. How did that collaboration come about and what did you learn? Stepping into the world of a foundational thinker as both colleague and co author.

[Alex Emis]

So I've known Richard for a while.

[Alex Emis (continued or alternate voice)]

When I was in graduate school, My office ended up being right next to his because he did his winters in San Diego and that's where I got my PhD and and we started talking pretty early.

[Alex Emis]

And then my first job was at Carnegie Mellon and we kept talking throughout that process.

[Alex Emis (continued or alternate voice)]

And at some point he called me up and said, why don't you come out and give a talk at University of Chicago? I ended up with a job at University of Chicago.

[Alex Emis]

Sometime in the first year at University of Chicago, he called me and said, hey, I got a project.

[Alex Emis (continued or alternate voice)]

Would you be interested in thinking about it?

[Alex Emis]

And it was basically the original winner's coach, which was basically the anomalies columns.

[Alex Emis (continued or alternate voice)]

That he had been writing about each individual behavioral economics phenomenon.

[Alex Emis]

Basically taking all of those columns that he had written up to 92, stapling them together and giving them, making them into a book. And they. It happened to have gone out of print and the publisher asked him if.

[Alex Emis (continued or alternate voice)]

He wanted to do an update.

[Alex Emis]

I jumped at the opportunity. It's not every day you get to.

[Alex Emis (continued or alternate voice)]

Work with a Nobel laureate. He's a big hero of mine and we're friends. So I thought it was going to be a lot of fun.

[Alex Emis]

It ended up not being an update as those things traditionally are done. About two thirds of the book is brand new. Essentially what we ended up deciding to do was to take those original Anomalies.

[Alex Emis (continued or alternate voice)]

Columns and use them as like a.

[Alex Emis]

Foundation for each chapter and then rewriting them to some extent for the modern audience. And then for each chapter that covers a specific topic in behavioral economics, there's an update that looks at all of the research that's happened in over 30.

[Alex Emis (continued or alternate voice)]

Years in that space so that those.

[Alex Emis]

Updates essentially catch the reader up to what's been happening in behavioral economics since 1992, which includes new topics and kind.

[Alex Emis (continued or alternate voice)]

Of new areas that behavioral economics has gone into.

[Interviewer/Host]

And it is interesting over that 30 year period how many of these theories used to be questioned at first and now you can spout them off and they're widely accepted, although I still don't see a lot of them being placed in modern textbooks, which is something that we need to fix. But I'm interested. I've heard a lot about Richard Thaler. Haven't had a chance to meet him here. He's very humorous, but I'm wondering what's the most powerful piece of wisdom or advice he's given you.

[Alex Emis]

Probably the most powerful piece of advice is in terms of my day to day life that I use is to not worry or argue, particularly argue about things that probably aren't going to happen. So he calls the don't argue over.

[Alex Emis (continued or alternate voice)]

Off equilibrium paths, which is an econ way of saying, look, if you and.

[Alex Emis]

Your wife are arguing about something, you know what kind of house you're going to get when you move to Stanford, California, think about are you going to move to Stanford, California in to begin with? And the chances of that are fairly low. So just don't argue, don't have that argument. Say, let's table that. It turns out like a lot of the kind of conflicts and anxiety that I particularly have and many others do too, are about things that counterfactuals low probability events, things that are probably not going to happen. And thinking through, oh, am I worried about something? What is it? What is the probability of that thing actually happening? And if it's really low, just think about something else, argue about some.

[Alex Emis (continued or alternate voice)]

Well, try not to argue about.

[Alex Emis]

But if you have to argue about.

[Alex Emis (continued or alternate voice)]

Something that's probably going to happen.

[Alex Emis]

And that piece of advice, I actually reference it all the time, particularly in.

[Alex Emis (continued or alternate voice)]

My interpersonal life and how I go about my day.

[Interviewer/Host]

I understand behavioral economics began as a rebel field, as I alluded to earlier. But I understand when the book was first written, a lot of the experiments that were done at that point in time were in the classroom or in the lab. And I know one of the big evolutions, especially now through the work that Katie Milkman and Angela Duckworth are doing with behavior change for good, is we're now able to start doing a lot more field research and with their evolution, a lot more mega studies around this. How has that shaped where the field is going, do you feel?

[Alex Emis]

That's mostly what the updates are focused on is the fact that precisely as you said, the original behavioral economic studies, and that was the pushback, was that they were done with college students at low stakes, sometimes hypothetical, not even like really consequential decisions. And economists were basically like, hey, that's cool, fun study, but we don't really.

[Alex Emis (continued or alternate voice)]

Care about college students who don't know what they're doing.

[Alex Emis]

We care about stock market professionals, we.

[Alex Emis (continued or alternate voice)]

Care about professional athletes, we care about.

[Alex Emis]

CEOs of companies, and we just don't think they're going to make these mistakes. Nice study, but we don't care. And for the last 30 years, the field has moved into, as you said, the field. It's real. It's studies with real professionals, large studies, field experiments, observational data sets showing that 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.

[Alex Emis (continued or alternate voice)]

Line making decision after decision.

[John Miles]

Before we continue, I want to pause on something important. Listening to a conversation about decision making under pressure is one thing. Noticing how those forces shape your own choices is quite another. That tension between momentum and discernment is exactly what this conversation with Alex Emis is about. Meaning isn't shaped only by what we choose. It's shaped by what we continue. That's why each episode in this series is paired with reflection tools inside my substack.

[Interviewer/Host]

The ignited life.

[John Miles]

Not to tell you what to do, but to help you see structure more clearly. Asking questions like where might I be honoring momentum without reassessing cost? What environments are shaping my choices more than my values? And what would it look like to choose sustainability over escalation? You can join [e-mail] Now, a quick break from our sponsors. Thank you for supporting those who support the show. You're listening to Passion Struck on the Passion Struck Network. Now back to my conversation with Alex Emis.

[Interviewer/Host]

It's really interesting. I first started to get immersed in this in the mid 2000s and I was working as an executive at Lowe's at the time and I was in charge of all the data across the company. And we spent a lot of time looking at the supply chain, obviously, but even more time looking at customer patterns and interactions. And so we were hiring a team of data scientists and behavioral scientists to help us understand how do we modernize the supply chain ecosystem and get people to work more efficiently. But more importantly, we were looking at how do you engage with the consumer in what we were trying to do as a total closed loop. So as they were using different channels to interact with Lowe's, whether it be online, the call center, in the store, etc. How do you make it feel to them like it's one channel and not separate distinct channels? And that's evolved today for them into my Lowe's and other things. But it's really fascinating to me how much it is now powering so much of commerce that's done around the world. Can you talk about that a little bit more?

[Alex Emis]

I think with behavioral economics and behavioral science, I think what many people's perceptions are missing is the amount of behavioral economics and science that's been going on.

[Alex Emis (continued or alternate voice)]

In the private sector.

[Alex Emis]

A lot of the focus has been.

[Alex Emis (continued or alternate voice)]

On governments, it's been on public sector initiatives.

[Alex Emis]

But the private sector has really been doing behavioral economics before behavioral economics was even a field. Companies like Lowe's, as you mentioned, are.

[Alex Emis (continued or alternate voice)]

Doing a lot of behavioral economics in terms of thinking about improving the customer experience.

[Alex Emis]

I had worked with PNC briefly at some point thinking about designing my wallet.

[Alex Emis (continued or alternate voice)]

Which is like their platform for getting people to have all of the information.

[Alex Emis]

That they would want about their bank.

[Alex Emis (continued or alternate voice)]

Account in one spot, eliminating these sorts of barriers for the consumer experience.

[Alex Emis]

Again, when you're thinking about kind of the standard model of economics, these things shouldn't really matter. The fact that you have to click a couple times to get information about the amount that you have on loan versus the amount that you have in in your cash or savings account, these sorts of things are so cheap that people should be able to do it and you don't need to create a.

[Alex Emis (continued or alternate voice)]

Separate platform for it.

[Alex Emis]

But the fact of the matter is, because people are have bounded rationality, it really matters that they have everything in front of them in an easily digestible way. This goes back into the idea of mental representation. If I have my loan in one.

[Alex Emis (continued or alternate voice)]

Spot of the website or the platform.

[Alex Emis]

If I have my savings account in.

[Alex Emis (continued or alternate voice)]

A different platform, or all of these.

[Alex Emis]

Things are earning different interest rates, I.

[Alex Emis (continued or alternate voice)]

Have a credit card open.

[Alex Emis]

So what a lot of people do, for example, when they don't have these things at the same time, they have a high interest rate balance on their credit card, while at the same time holding enough money in their bank to.

[Alex Emis (continued or alternate voice)]

Pay off the credit card.

[Alex Emis]

So essentially they're losing money on the interest rate, paying these high interest rates. Well, where they could just completely pay off their credit card and not have.

[Alex Emis (continued or alternate voice)]

To deal with that at all.

[Alex Emis]

But the fact is, because they don't have all of that information given to them at the same time, on some platforms, many people are doing that and.

[Alex Emis (continued or alternate voice)]

I think a lot of companies are.

[Alex Emis]

Really trying to incorporate behavioral economics to.

[Alex Emis (continued or alternate voice)]

Make these sorts of consumer experiences a lot better.

[Interviewer/Host]

Alex, thanks for going into that. I wanted to go back to the book and I wanted to start with the basic idea itself. What is the winner's curse and how does it show up in our daily lives?

[Alex Emis]

The winner's curse is best demonstrated in a.

[Alex Emis (continued or alternate voice)]

In a little experiment that you can do yourself.

[Alex Emis]

If you want to make some easy money and you have a free evening, get a jar, fill it with some.

[Alex Emis (continued or alternate voice)]

Coins and go to the pub or something like that and say, look, everybody.

[Alex Emis]

In the room bid on this jar of coins and the winner gets the money. You don't have to take the coins. I'll venmo you the money and what you're going to see time after time. And I know this because we've run.

[Alex Emis (continued or alternate voice)]

These experiments in class all the time.

[Alex Emis]

The person who actually ends up winning will pay more for the jar that's in the jar. So you're going to be able to.

[Alex Emis (continued or alternate voice)]

Earn some money from this.

[Alex Emis]

So why does that happen? Essentially, when you look at the jar, everybody looks at the jar. People get a different estimate of how.

[Alex Emis (continued or alternate voice)]

Much is in the jar.

[Alex Emis]

So some people will think, let's say there's 15 bucks.

[Alex Emis (continued or alternate voice)]

Some people say it's 18 bucks.

[Alex Emis]

Sometimes we'll say 12, 9, 8. People are all over the place. They don't know how much money is in there. But who's going to end up winning? 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. It's the idea that the person who's winning is actually going to be losing money because they're wrong in the positive direction. And that's the demonstration of the winner's curse. And that's partly why it happens. But the first time that when it was documented in the 70s, it.

[Alex Emis (continued or alternate voice)]

It wasn't with a jar of coins.

[Alex Emis]

It was oil executives scratching their head about the fact that, look, we got these expensive engineers looking at oil wells, thinking how much oil is going to.

[Alex Emis (continued or alternate voice)]

Be in these wells?

[Alex Emis]

And every time we actually win a bid on an oil well, we end up having less oil in there than we thought we did, and we keep losing money. What's going on? And they published these papers in trade journals calling it the winner's curse by basically saying, look, something is wrong. Every single time we end up winning, we end up actually losing what's going on. And folks like Richard Thaler, Max Bazerman, and other people delved into it and started to understand the psychology behind the phenomenon.

[Interviewer/Host]

Man, it's so interesting. I spent the early part of my career working as a practice leader at Arthur Andersen, and I was in the Houston market. And I still remember sitting in this room at ExxonMobil with hundreds of executives across the industry hearing, hearing an economist come and talk to us saying that we had reached the peak of big oil. And from this point in history, going forward, there was going to be a demise every single year. Boy, was he wrong. With the evolution of how we do fracking and other things, science finds a way. Yes, exactly. But it reminds me of markets and how modern markets change, which is something that you guys covered in the book. And you did it through social contagion and the persistence of overconfidence in modern markets by examining Reddit and Robinhood, and I was hoping you could give the audience a little bit bigger take of what I'm talking about here.

[Alex Emis]

With Robinhood and the proliferation of these online communities, essentially. So this has a bit more to.

[Alex Emis (continued or alternate voice)]

Do with the stock market and these like Meme Stock phenomenon.

[Alex Emis]

There's obviously many more implications, but the.

[Alex Emis (continued or alternate voice)]

Meme Stock phenomenon is a great example.

[Alex Emis]

We've had bubbles in the past and in the past, and going back to.

[Alex Emis (continued or alternate voice)]

The 1600s, we've had bubbles.

[Alex Emis]

And it's this idea that people over. There's this herd mentality where people think, like me, yeah, maybe this is overvalued.

[Alex Emis (continued or alternate voice)]

But everybody else is bidding on it.

[Alex Emis]

If I don't bid in on it, I'm going to miss out on all.

[Alex Emis (continued or alternate voice)]

This money to be made.

[Alex Emis]

So I'm going to bid on it too.

[Alex Emis (continued or alternate voice)]

And the price goes through the roof.

[Alex Emis]

And then one day somebody wakes up and says, hey, this is a bubble.

[Alex Emis (continued or alternate voice)]

I'm getting out.

[Alex Emis]

And this starts that whole downstream cycle where everybody ends up losing money except.

[Alex Emis (continued or alternate voice)]

For that one person who got out in time.

[Alex Emis]

And this idea behind bubbles is now again supercharged. When you have these digital spaces, like the combination between Reddit, for example, and Robinhood, what does that combination look like in practice? The GameStop situation is a very nice example because it allows people to coordinate their decisions very, in a fundamentally different way. They can say in the wall, there's.

[Alex Emis (continued or alternate voice)]

A subreddit called Wall Street Bets.

[Alex Emis]

What Wall Street Bets allows you people to do is to say, look, we're going to all hold on to this. And actually they have this, their own language to talk about the fact that.

[Alex Emis (continued or alternate voice)]

Everybody is going to be holding on to these, this, these sorts of stocks.

[Alex Emis]

So they buy the stocks. And without Reddit, you don't really know who else is going to sell, because nobody's coordinating.

[Alex Emis (continued or alternate voice)]

Everybody's sitting independently in their house.

[Alex Emis]

With Reddit, you have the ability for.

[Alex Emis (continued or alternate voice)]

People to coordinate, to say, like Diamond Hands.

[Alex Emis]

What that means is that everybody's committing on holding. And what that means is that bubble.

[Alex Emis (continued or alternate voice)]

Can go on for a much longer time than what we've seen before.

[Alex Emis]

Because what we've seen before is these.

[Alex Emis (continued or alternate voice)]

Things like, are bubbling up in the garden, explode, bubbling up and explode.

[Alex Emis]

With GameStop, you look at the price now and it's actually, it hasn't crashed. It went down certainly from the peak, but it's still up there because people are coordinating to hold their shares, saying, look, we're, we're going to keep this going. And the ability for people to Coordinate.

[Alex Emis (continued or alternate voice)]

On buying these things very easily through Robin Hood.

[Alex Emis]

And the combination of being able to.

[Alex Emis (continued or alternate voice)]

Publicly coordinate and communicate on these forums.

[Alex Emis]

Has led to a very different financial market for retail traders than say what.

[Alex Emis (continued or alternate voice)]

We had even 10 years ago.

[Interviewer/Host]

Yeah, that was just shocking when that happened a few years ago. To see how a community platform like that drove such a huge market change. It was fascinating and scary at the same time. I'm not sure your thoughts about it, but I still remember that and just being in complete awe about what happened.

[Alex Emis]

These.

[Alex Emis (continued or alternate voice)]

There's two different models of financial markets out there.

[Alex Emis]

There's a model of kind of efficient markets where the price of a stock is the discounted future cash flow of that company.

[Alex Emis (continued or alternate voice)]

That's less the standard rational model.

[Alex Emis]

The people are saying, like, look, this is the price that this stock is worth because that's how much it's going to be paying out through dividends and.

[Alex Emis (continued or alternate voice)]

All sorts of other things to me. And that's how much I'm willing to pay for it. This is the fully rational model.

[Alex Emis]

The other one is by John Maynard Keynes, who was this giant economist in the 20s and 30s, and he called the stock market a beauty contest. What's the, what does he mean by that? Back in the day you had these newspaper contests where there was a whole page of different faces, let's say usually was women's faces, and the winner of the contest was the one who picked the face that everybody else picked up. So not the one he preferred, the one that everybody else picked. So this gets into this idea of theory of mind where my decisions are based on what I think everybody else is thinking. And that's a fundamentally different model of the stock market where now I don't care how much cash flow GameStop has, I don't care how much cash flow AMC has. I am buying GameStop because I think.

[Alex Emis (continued or alternate voice)]

Other people are gonna buy GameStop and that's it.

[Alex Emis]

And that, and therefore because of that, the odd. These online forums have this huge power of coordinating this behavior. Because now I can say, look, I know that GameStop's gonna pop because a.

[Alex Emis (continued or alternate voice)]

Lot of people are saying GameStop is gonna pop.

[Alex Emis]

And now you have AMC and Kohl's and all of these other different completely.

[Alex Emis (continued or alternate voice)]

Random companies popping just because of this phenomenon.

[Interviewer/Host]

Yeah, man, it is so interesting.

[Alex Emis (continued or alternate voice)]

Yeah.

[Interviewer/Host]

Well, I wanted to ask you about some of the classics and I thought we could start with loss aversion. We've long believed losses hurt about twice as much as equivalent gains Please us. Does this still hold true in the hyper stimulated digital Environment or our attention emotion, do you find changing that ratio?

[Alex Emis]

That's a great question. We don't have a lot of data.

[Alex Emis (continued or alternate voice)]

On this, first of all.

[Alex Emis]

So you're thinking like what is the.

[Alex Emis (continued or alternate voice)]

Loss aversion on crypto or something like that, right?

[John Miles]

Exactly.

[Alex Emis]

Or like a just a completely digital asset. I don't think anybody I know has.

[Alex Emis (continued or alternate voice)]

Collected data on this, but this is.

[Alex Emis]

A quite an interesting question. What are the implications for of behavioral economics when you have physical goods such.

[Alex Emis (continued or alternate voice)]

As a house, a mug, other sorts of products?

[Alex Emis]

What are the implications of those of behavioral economics in that space? For a world where a lot of stuff is just going to be digital completely isn't going to have a physical.

[Alex Emis (continued or alternate voice)]

Presence in the world?

[Alex Emis]

If I was to hypothesize and based on some of my own data, where I've run endowment effect experiments with digital art, and essentially I found that things are largely unchanged. If I tell you that you are.

[Alex Emis (continued or alternate voice)]

The owner of an art piece versus.

[Alex Emis]

I ask you, how much are you willing to pay for that art piece? Your valuations change just from me telling you you own it, the minimum that you'd now be willing to accept a part with it increases by two and a half times relative to five seconds.

[Alex Emis (continued or alternate voice)]

Ago before I told you that.

[Alex Emis]

And this is like the.

[Alex Emis (continued or alternate voice)]

For your audience, this is the NFTs, non fungible tokens which are now used to allow digital creators to have some ownership over art.

[Alex Emis]

So the endowment effect doesn't seem to really weaken when you go into the.

[Alex Emis (continued or alternate voice)]

Digital space, at least in that sense.

[Interviewer/Host]

Okay, well, another one I wanted to go into was the fairness anchoring effect. And so I guess the way I want to frame this is fairness and norms. So there are a lot of modern pricing debates that people get into about rejecting deals that we see online and feeling that they're unfair even when they cost US money, etc. What does this say about the role of fairness in sustaining social trust?

[Alex Emis]

In my view, fairness and norms are key for sustaining cooperation. Within many experiments is the fact that if you have a game, so it helps to go through one example of.

[Alex Emis (continued or alternate voice)]

This sort of game.

[Alex Emis]

So the public goods game is a really nice way of studying these things. What it means is that let's say.

[Alex Emis (continued or alternate voice)]

Me and you and maybe two or three other people are playing this game.

[Alex Emis]

And the game is fairly simple. Me and you have an amount that we're given. So like that's an endowment that, let's say it's two bucks.

[Alex Emis (continued or alternate voice)]

Each of us has two bucks and.

[Alex Emis]

Then we decide how much of the two Bucks to contribute to the quote unquote public good. Whatever we contribute gets added up, multiplied by some amount, and then divided evenly.

[Alex Emis (continued or alternate voice)]

Between all of us.

[Alex Emis]

What that means is that even those who didn't contribute anything would still get.

[Alex Emis (continued or alternate voice)]

A piece of the public good.

[Alex Emis]

What does that mean for economic, what does economic theory say about this? Well, if I get something without contributing anything, guess what I'm going to do?

[Alex Emis (continued or alternate voice)]

I'm going to contribute nothing.

[Alex Emis]

And then guess what happens?

[Alex Emis (continued or alternate voice)]

Nobody contributes anything.

[Alex Emis]

So the economic theory is a very.

[Alex Emis (continued or alternate voice)]

Strict prediction of what happens in public goods games.

[Alex Emis]

What actually happens in reality? Well, people contribute something. They contribute 20, 30, 40% of their endowment, especially in the first period. They contribute something, gets divided, everybody gets something. But as the game continues, especially in the very final round, those contributions go to zero. In the final round, people think, well, everybody else is contributing something. You know what? What if I just don't contribute anything and I'll still get paid?

[Alex Emis (continued or alternate voice)]

Guess what?

[Alex Emis]

Everybody else is thinking the same thing.

[Alex Emis (continued or alternate voice)]

And then nobody contributes and nobody gets anything other than their endowment.

[Alex Emis]

So basically, the overall pie shrinks as the game progresses. So the real innovation happened in 1999.

[Alex Emis (continued or alternate voice)]

2000 with Ernst Fair and Simon Gokner.

[Alex Emis]

Ran a game of the public goods game. But they introduced one little extra thing.

[Alex Emis (continued or alternate voice)]

Which has to do with fairness and norms.

[Alex Emis]

What they did is that after every single round of the public goods game, everybody has the opportunity to spend a little bit of their own money to take away a larger amount from somebody else. What does this actually mean in practice? It allows people to punish those who don't contribute. If people feel like, whoa, this was unfair, I contributed something, but you didn't, I can now punish you, hurt you, at a cost to myself. Again, economic theory, very simple prediction. Why the H e l l would I spend money to punish somebody else? I wouldn't. So the economic theory predicts no contributions, no punishment. What ended up happening in this game.

[Alex Emis (continued or alternate voice)]

People felt like non contributors were acting.

[Alex Emis]

Unfairly and they were more than willing to punish them. And what did that do to the game? It meant that people who were thinking, maybe I won't contribute now, they got worried about getting punished, so they contributed. So contributions went up almost all the way. And not only did they go up in the beginning, they stayed high through the entire game, even in the last round. Because even in the last round, if I don't contribute, I'm still going to.

[Alex Emis (continued or alternate voice)]

Get punished, so I'm going to contribute.

[Alex Emis]

So adding this element of fairness, of punishing norms, allowed cooperation to flourish in this setting without the ability to punish people who violate norms, cooperation just completely.

[Alex Emis (continued or alternate voice)]

Went to crap and was by the final round there was none of it left.

[Interviewer/Host]

Well, and now I wanted to talk about one of the things that Richard Thaler is most famous for, which is his work on nudges, which he did with Cass Sunstein, who has been on this program and. But I wanted to revisit this in its ethical dimension. And you've been discussing a little bit about this in the past couple of answers. But we started this episode talking about choice and the research that you've done around how to make better choices. But there's this tension between helping people to make better choices versus manipulating their autonomy. And so you've explored this dual use quality of throughout the book. And what did you find that's most meaningful about the research?

[Alex Emis]

So the whole nudge program was started by a paper called Libertarian Paternalism. And the idea there was to say, look, standard economics defines a choice set.

[Alex Emis (continued or alternate voice)]

In a particular way.

[Alex Emis]

And behavioral economics says that we can choices can change without affecting people's ability to make decisions. So what does that mean? So let's go to the 401k example. So the 401k example, the classic opt.

[Alex Emis (continued or alternate voice)]

In, opt out study.

[Alex Emis]

So before Bridget, Madrian and Shay had this landmark study in the late 1990s, essentially what did that look like? People chose to opt in into a.

[Alex Emis (continued or alternate voice)]

Retirement plan and most people didn't.

[Alex Emis]

What they did instead is to say, hey, instead of people choosing to opt in, let's make the default that they are in the plan and if they want to, they can opt out. So all it is that instead of checking the top thing, the bottom thing is checked. For standard economists, doesn't matter. Right. It's the choice that is exactly the same. I'm deciding whether opt in or opt out turned out. This raised opt in rates through the roof.

[Alex Emis (continued or alternate voice)]

Many more people ended up being enrolled.

[Alex Emis]

Right.

[Alex Emis (continued or alternate voice)]

So this is the behavioral economics part. This is a classic nudge.

[Alex Emis]

You don't change the. In the actual choice environment, people are free to make the same decisions as before, but they're making different decisions because you're introducing this seemingly irrelevant factor, which.

[Alex Emis (continued or alternate voice)]

Is what Richard calls it, into the mix.

[Alex Emis]

What people are defaulted in, the ethicality behind it depends on who you ask. Frankly, when you're getting into ethics, this is a normative field. So different people have different opinions.

[Alex Emis (continued or alternate voice)]

Now you're in the world, you're not in the data world, you're in the opinion world.

[Interviewer/Host]

Right.

[Alex Emis]

And there's a group of people who view nudges as perfectly ethical. Other people disagree with that statement. They think that your behavioral economics should.

[Alex Emis (continued or alternate voice)]

Be part of the coercion.

[Alex Emis]

People can have disagreements about this. I think with something as important as in retirement savings, you have to start.

[Alex Emis (continued or alternate voice)]

Thinking about the costs and benefits to people at the end when they're reaching.

[Alex Emis]

Retirement and they're thinking, wow, I forgot to opt in into my 401k plan. I really wish I did. If only somebody had nudged me to contribute to more my 401k, I would.

[Alex Emis (continued or alternate voice)]

Have ended up with more money for my retirement.

[Alex Emis]

In other cases, in the case of organ donations or something like that, Richard and Cass have work in this space saying, look, we should give people full.

[Alex Emis (continued or alternate voice)]

Autonomy and nudges don't really belong in that space.

[Alex Emis]

So it really depends on the context.

[Alex Emis (continued or alternate voice)]

And it depends on the argument.

[Interviewer/Host]

Yeah. I also wanted, since we're on this topic, to explore Amazon and Amazon prime sales, because I understand Amazon uses nudges as well as anyone does. How should a listener think about this when it comes to like the psychological triggers that happen when Amazon is doing like a prime day?

[Alex Emis]

Yeah, so I think we talked about this in the beginning of the conversation. Companies have been doing these behavioral science.

[Alex Emis (continued or alternate voice)]

Behavioral economics experiments since they started.

[Alex Emis]

So Amazon is literally doing thousands of VB tests on how a prime day advertisement, how it should look, where it should look to, who it. And then you have different versions and those different versions are given to different people depending on their buying habits. The optimization of behavioral science in order.

[Alex Emis (continued or alternate voice)]

To get people to purchase is just.

[Alex Emis]

It'S done to a very, very huge.

[Alex Emis (continued or alternate voice)]

Extent by the, by these companies.

[Alex Emis]

Now I haven't looked at specific things that particularly Amazon has done, but certainly there's research in behavioral science showing that something like making shipping free, for example, or doing expedited shipping for a lower amount on a specific day really gets people to purchase because they're thinking, wow, their loss aversion is getting activated there.

[Alex Emis (continued or alternate voice)]

That they feel like they're going to.

[Alex Emis]

Be losing less money.

[Alex Emis (continued or alternate voice)]

This is something that they really want. They want this thing faster.

[Alex Emis]

This is the whole self control myopia.

[Alex Emis (continued or alternate voice)]

Thing being taken advantage of. Now I get to have this thing which maybe I don't need at all.

[Alex Emis]

But hey, I get it faster, I'm.

[Alex Emis (continued or alternate voice)]

Going to buy it.

[Alex Emis]

That's to say that they're doing a lot of different things all at the.

[Alex Emis (continued or alternate voice)]

Same time and they're making these cocktails of behavioral science in order to get people to purchase.

[Alex Emis]

Firms have been doing this since the beginning of capitalism.

[Interviewer/Host]

Right.

[Alex Emis]

It's Just now it's on a completely different scale.

[Interviewer/Host]

We've talked about the digital world a few times now. I want to think about digital biases, specifically digital biases. The standpoint of authoring and I think of substack and I think in general I'm finding that people are under reporting their use of AI tools because of something you explore in the book, which the social desirability bias. But to me, if someone asks you if you're using AI to help with your writing and someone answers no, it's almost unbelievable to me because if you're using a Google search or literally any technology that's out there, all of it is underpinned by different AI frameworks. So arbitrarily you are using it in almost any research that you're doing. But what do you think it reveals about how humans perceive technology's role in their competence or their creativity?

[Alex Emis]

I think so I have a paper.

[Alex Emis (continued or alternate voice)]

About this on AI and social desirability bias.

[Alex Emis]

So we run a study at the.

[Alex Emis (continued or alternate voice)]

Large university asking students about their AI use.

[Alex Emis]

And when you ask them how much do you use AI ever, right.

[Alex Emis (continued or alternate voice)]

The answer is like 63%.

[Alex Emis]

And you might think, wow, that's low. Most students I think are using AI. And it turns out if you ask a slightly different question, and this is using techniques from psychology in order to overcome social desirability bias, you ask not whether you use AI, you ask whether your friends use AI. Now, social desirability bias isn't really affected because it's not me you're asking about, my friends. And that number is 95%. So that gap between 95% and 60 something percent, that is the gap that people are misreporting their AIUs essentially. And we've collected other data to confirm that the gap that it's underreporting versus.

[Alex Emis (continued or alternate voice)]

Over reporting in one condition versus the other.

[Alex Emis]

So this is something that, that's going to be a challenge for companies, for policymakers, especially for educators. So this is a space that I'm very interested in from both a personal perspective, I'm a teacher, but also from a policy perspective in terms of like how do we think about university or.

[Alex Emis (continued or alternate voice)]

Higher ed in the age of AI?

[Alex Emis]

Obviously we can't say never use AI, become a Luddite. But also we want people to use AI in a way that helps them to learn something so they retain some.

[Alex Emis (continued or alternate voice)]

Information, but they also learn how to use these tools in an effective way that's going to help them when they exit the university.

[Alex Emis]

And that kind of cause benefit is something that's that that conversation is happening.

[Alex Emis (continued or alternate voice)]

Right now, but it needs to happen faster.

[Interviewer/Host]

Yeah. I can't remember if I was talking to Bobby Parmar or Judd Kessler, but one of them was telling me in their class that understood that the papers that they're getting back are progressively getting better and better because it's obvious students are using AI to help them write them. But what I wish I remembered which one told me this, but what they were doing in their class was taking it to another level. So they were making them come in front of the class to show the application of what they researched to make sure that they were retaining what they were writing about. And they were telling me that it really showed a huge difference between who was actually retaining and using the information versus who was just using the AI tools. Because I know I find myself when I'm using them a lot, I'm not retaining as much about the work that I'm doing as compared to when I'm doing a whole bunch of research and then having to write it on my own.

[Alex Emis]

There's great research about this. Sherry Malamid, who's Judd's colleague at Wharton, shows that if you do research through AI versus just Googling it so you have access to Google, which is also.

[Alex Emis (continued or alternate voice)]

Uses AI but in a different way versus LLMs to help you research a topic, you just simply retain more information when you're.

[Alex Emis]

Even though you're reading the same information when you search for it yourself and parse through it. The way that our brain works is to retain the information between the pauses. So like when you're reading a book versus you get the spark notes from a book. Right. Why did we discourage spark notes? Like in 30 years ago, 20 years.

[Alex Emis (continued or alternate voice)]

Ago, when I was in school, the.

[Alex Emis]

Information is the same, but the process of reading the book, the text, and pausing, flipping back and forth, all of that is part of learning, but it's discounted because it doesn't seem like that's not where the information is. And that process is really. There's. We need to be very explicit about what actual learning looks like in order for the broader population to understand that AI is an incredible technology. But reading winner's curse by saying what what is in the winner's curse? Give me a two pair paragraph summary versus actually reading the book, you're going.

[Alex Emis (continued or alternate voice)]

To retain something very different.

[Interviewer/Host]

Yeah, absolutely. Well, Alex, if listeners could take two or three practical tools from this conversation to improve their own decision making, where would you tell them to start?

[Alex Emis]

Don't succumb to the sunk cost Fallacy. So the sunk cost fallacy is this idea that I've already done something, I've already gone down this path, I might as well keep going.

[Alex Emis (continued or alternate voice)]

Even though it's looking like a bad decision.

[Alex Emis]

Don't succumb to that sunk cost fallacy. Always take a moment, think is the next step. If I hadn't gone into this decision to begin with, if I hadn't paid money to invest in this stock, if I hadn't taken those that one class in that topic, would I still do that next thing? If the answer is no, stop.

[Alex Emis (continued or alternate voice)]

Do something else.

[Alex Emis]

Just this is one of the most.

[Alex Emis (continued or alternate voice)]

Important things that behavioral science has taught us.

[Alex Emis]

I think the first thing that I said don't worry about things that have very low probability probabilities of happening. Don't argue about those things.

[Alex Emis (continued or alternate voice)]

I think that's a very good lesson too. I use it all the time in my own life.

[Alex Emis]

And the other thing that I've done research on and that's in the book is take time to deliberate. Fast decisions are not necessarily good decisions. System 2 thinking System 2 thinking and people know this, but they just that doesn't work into their everyday lives. So a lot of states have cooling.

[Alex Emis (continued or alternate voice)]

Off periods before they can get a divorce. There's a reason for that.

[Alex Emis]

There's cooling off reasons before you can.

[Alex Emis (continued or alternate voice)]

Get purchase a firearm in many states.

[Alex Emis]

There's a reason for that. The reason is that we know that decisions are better if we think harder.

[Alex Emis (continued or alternate voice)]

We cool off, the emotions wear off and we can consider all of the options.

[Alex Emis]

And it's actually very easy to incorporate.

[Alex Emis (continued or alternate voice)]

That lesson into your everyday life in.

[Alex Emis]

Terms of stopping and thinking while you're.

[Alex Emis (continued or alternate voice)]

Making important or semi important decisions.

[Interviewer/Host]

Alex, I always love to ask this question. What does it mean to you to live a passion struck life?

[Alex Emis]

I think I'm extremely lucky to be doing what I'm doing because I've stumbled into a field where I feel passion struck and just passionate every single day. Literally every single day because there's just so much out there to explore and to learn about. And 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. If I don't think I have time to do something and it sounds new and potentially exciting, just make the time and do it. That, that, that's really. And taking risks has led me to be quite interested and excited and passionate.

[Alex Emis (continued or alternate voice)]

In my everyday life in terms of what I do every single day for work as well as for fun.

[Interviewer/Host]

And lastly, Alex, where's The best place listeners can learn more about you.

[Alex Emis]

I'm active on X or Twitter, however you want to call it.

[Alex Emis (continued or alternate voice)]

So I have Alex CMOS on that.

[Alex Emis]

Platform and my website is aleximas.com and if you guys want to check out.

[Alex Emis (continued or alternate voice)]

The the book, it's got a very.

[Alex Emis]

Active website, winners curse.org it's got a lot of these materials. It's got slides to take these sorts of concepts and break it down. It's got replication materials for the experiments.

[Alex Emis (continued or alternate voice)]

If you want to run them, learn how to run them by yourself. So that's another place.

[Interviewer/Host]

Awesome. Well, Alex, it was such an honor to have you. Thank you for joining us on Passion.

[Alex Emis (continued or alternate voice)]

Thank you so much, John. Thank you.

[John Miles]

That brings a close to today's conversation with Alex Amos. What stayed with me the most is how quietly the Winner's Curse operates. Not just in markets or negotiations, but in lives shaped by escalation, comparison, and environments that reward winning without revealing cost. Alex showed us that good decision making isn't about intelligence or restraint. It's about clearly seeing inside the systems we're operating in. Meaning isn't about accumulating wins. It's about choosing what can be sustained without distortion. And that brings us to what's next in the Meaning Makers series. In my upcoming episode next week, I'm joined by Shanna Pearson, where we'll explore how meaning is cultivated not through optimization or acceleration, but through presence, embodiment, and the discipline of slowing down. If Alex helped us see the hidden cost of winning, Shanna will help us explore what it looks like to live from alignment rather than escalation.

[ADHD Speaker]

It bothers me when people refer to ADHD as a superpower. It really does, because there's nothing about ADHD that makes life easier. And it's difficult to manage ADHD on so many levels, like in your relationships, career, personal, health. Name it. And so when people are like, oh, it's a superpower. You should be able to do, like all of these things so much. You've got this and you don't. And you know that life is really hard, and you know that you're struggling, and you know you're working a hundred times harder than every single human and longer than anyone. There's no superpower. And so then you just feel like there's something else that's wrong with you because you can't even use your superpower. You don't even know where it is. Like, where's the superpower part of this?

[John Miles]

Before you move on with your date, I'd invite you to pause and ask, where in my life might momentum be substituting for discernment? If you want support applying these ideas, you can join me inside my [e-mail] where each episode in the series is paired with reflection tools designed to help you integrate insight into how you actually live. As we continue the Meaning makers, Remember, significance isn't built by winning at all costs. It's built by choosing what truly holds. I'm John Miles. You've been passion struck. Until next time.