In early October, Richard Thaler, the Professor of the University of Chicago, was awarded the Nobel Prize in Economics for describing a more realistic model of economic behavior of people. The co-author of one of the articles of the professor on this topic was the economist and professor of the Graduate School of Business of Nazarbayev University Gerit Thierry Post. The authorities talked to the professor about his role in Thaler’s studies, the application of the model of Bounded Rationality of a person and its importance for Kazakhstan.
Mr. Post, could you tell us about your role in the research of Richard Thaler, for which he was awarded the Nobel Prize. What issues did you face?
The Professor Thaler had been working for over 40 years to find a place for psychology in economy. He built a bridge between the economic and psychological analysis of decision-making by individuals. Traditional economy is based on the assertion of rational behavior of people and basically assumes that the human brain works as a supercomputer and can solve even the most complicated challenges. It is clear that this is unreal. We know that human beings have cognitive limitations and emotions.
As for me, I was the author of one of the researches of the professor, published ten years ago by the American Economic Review magazine. The research was successful for several reasons – it was quoted many times in academic works and it attracted a lot of media publicity. In our research we have made several innovations at the same time: experiments with students in the behavioral laboratory and experiments in the medical school related to brain scanning, which was necessary for understanding the neurological processes in human behavior. We also conducted several natural experiments during the analysis of the game TV show. We had access to a unique set of data from a television producer Endemol. They concerned the behavior of competitors in telegames with million prize funds. Combining these results with the research, we presented engaging empirical data on prejudices in behavior and mistakes in decision-making.
The research was successful in those days, and it has remained so after ten years. It’s a comfort to know that the founding father of our scientific direction received a grand prize. When this news appeared, I walked with a big smile, I felt ten centimeters taller. Although, in fact, this is the second Nobel Prize in Economics, awarded for psychological research. In 2003, the Professors Daniel Kahneman and Vernon Smith received it. This was the first sign that times in science are changing.
The full article is available here