Today’s guest on the Consumerism Commentary Podcast is Gary Belsky, author of the book Why Smart People Make Big Money Mistakes and How to Correct Them: Lessons from the Life-Changing Science of Behavioral Economics and Editor-In-Chief of ESPN the Magazine.
Gary and Tom Dziubek discuss behavioral economics and how understanding how we make decisions involving money can help us make better decisions.
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Production Number: S02E19
Segment Number: 62
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Table of contents
[00:00] Introduction from Flexo
[00:32] Interview with Gary Belsky
– [00:47] Gary’s background
– [03:44] Behavioral economics
– [04:36] “Bonuses” vs. “Rebates”
– [06:00] Mental accounting
– [09:42] Understanding and combating your weaknesses
– [12:12] The sunk cost fallacy
– [14:06] Maximizers and satisficers
– [16:24] Ignoring the base rate
– [17:50] Self-insuring yourself through savings
– [18:24] Understanding anchoring
– [19:37] Fighting overconfidence in personal finance
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Updated December 20, 2011 and originally published February 28, 2010. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @flexo on Twitter and visit our Facebook page for more updates.