We sent him questions and he volunteered to send us a video response, smoking jacket at all.
Download this podcast SARAH GREEN: Welcome to the HBR Idea Cast. I’m talking today with Paul Oyer, Professor of Economics at Stanford’s Graduate School of Business. SARAH GREEN: So Paul, I’d like to just kick off by talking a little bit about the economic concept of search costs.
It was quite hard for THEORY to get that first date with PRACTICE, but luckily it happened.
For example, Adam Smith wrote The Theory of Moral Sentiments, which proposed psychological explanations of individual behavior, including concerns about fairness and justice, and Jeremy Bentham wrote extensively on the psychological underpinnings of utility.
Time discounting research, which investigates differences in the relative valuation placed on rewards (usually money or goods) at different points in time, by comparing its valuation at an earlier date with one for a later date (Frederick, Loewenstein, & O’Donoghue, 2002), shows that present rewards are weighted more heavily than future ones.
Once rewards are very distant in time, they cease to be valuable.
Author of Predictably Irrational and the Upside of Irrationality, Dan Ariely is professor of psychology and behavioral economics at Duke.
He’s another one of these academics who might surprise you with his interests: He’s studied dating (does how hot you are affect whether you try to date equally hot people? ); and beer (if you expect it to taste good, will it taste good? He’s made irrationality–and why we sometimes do odd things–his life’s work.