The Hubris of Choice: Can We Actually Diagnose Bad Decisions?

This episode critically examines the foundational assumptions of behavioral economics, specifically how experts identify "bad" or "improvable" decisions. It highlights a new NBER paper which reveals that the three primary diagnostic methods used by behavioral economists to identify mistakes are inconsistent and contradict each other, challenging the validity of widespread "nudge" policies and choice architecture. Listeners will learn how this fundamental flaw undermines the rationale for paternalistic interventions, with the first diagnostic method, the Characterization Assessment, being introduced.