The Dunning-Kruger effect is an interesting psychological theory that looks at why novices tend to overrate their abilities and even rate themselves on par with experts. This mindset has real implications for decision making because overconfidence made lead us to make suboptimal choices.
Young Sheldon teaches his family about the statistics behind going for it on 4th down. A lot of football fans believe you just have to punt, but studies by economists like David Romer show that it’s often better to go for it on 4th down than to punt. The famous Pulaski Academy coach who never punts became a bit hit after being interviewed by ESPN. The NY Times even created a Twitter bot that would tweet about whether teams should punt or go for it and the bot tweets during NFL games.
I’m teaching an Economics of Crime course soon so I’ve been on the look out for great clips related to cheating. I think my current plan is to have a series of goofy examples of cheating. In this Ted Talk, Dan Ariely discusses some of the research from his books on honesty by describing the idea of irrationality related to honesty. The rational model of crime first flushed out by Gary Becker assumed that criminals performed a cost-benefit analysis for cheating and would only cheat if the expected benefits outweighed the costs of being caught. Ariely brings the behavioral aspect of economics into play with his discussion on the nuances around decision making, even in criminal enterprises.
This prankster is going around Chicago asking people to sell their dog for up to $10,000. Most people aren’t willing to part with their beloved pooch, but some people consider his offer. This clip is a good introduction to the idea of willingness to sell and people’s subject valuation of their possessions.
Louis CK works through the rational model of crime by Becker and why he’s happy that there are laws against murdering people. This clips would be great for a behavioral economics course or maybe a funny introduction to principles to talk about incentives, externalities, and public policy.
Stephen Colbert interviews economist Tim Harford about his then-recent book, Logic of Life. Harford and Colbert discuss a number of items that people may consider irrational, but actually turn out to be rational like voting, unprotected sex, and smoking. The entire discussion focuses on the central idea of the definition of rationality.
When teaching game theory, we inevitably spill into the notion of complete information with they “they know we know” and “we know that they know we know.” Now you can have Friends do it for you:
Charlie explains the Ultimatum Game to Nikki and why some people are willing to hurt themselves for revenge. When Nikki gives him $30 out of $100, she’s showing that concerns for equity lead people to act differently than what’s “optimal.”