$75, what I could get if I sold the bottle.

Which of the following best captures your feeling of the cost to you of drinking the bottle? (Ignoring exchange rates, of course.) The wine now sells at auction for about $75. “Suppose you bought a case of good Bordeaux in the future market for $20 a bottle. If you can relate to this, then you might be interested in your own answer to the following question that Thaler later used in a survey among subscribers to an annual newsletter on wine auction pricing called Liquid Assets. But then, why wouldn’t he also be willing to buy such a bottle? In fact, why did he refuse to buy any bottle that cost anything close to $100? As an economist, Rosett knew such behaviour was not rational, but he couldn’t help himself.” If he is willing to drink a bottle that he could sell for $100, then drinking it has to be worth more than $100. He also did not sell any of his bottles to Woody. Rosett said he occasionally drank one of those bottles on a special occasion, but would never dream of paying $100 to acquire one. In fact, a local wine merchant named Woody was willing to buy some of Rosett’s older bottles at current prices. He told me that he had bottles in his cellar that he had purchased long ago for $10 that were now worth over $100. “One case came from Richard Rosett, the chairman of the economics department and a long-time wine collector. Are there choices we make outside the model of constrained optimisation? This was the popular economic theory at the time, based on the premise that people choose the best from a limited budget and that prices always fluctuate based on supply and demand. In his book, cheekily titled ‘Misbehaving’, Thaler recounts a story about challenging a professor who also happened to be a wine collector. A decade of research later, his ideas lead to a new area of study, Behavioural Economics. Thaler hypothesised that this must have some impact on our finances. In fact, many of us do things that make no analytical sense at all. Thaler recognised that people’s behaviour in day-to-day life wasn’t always predictable. Thaler when he was an economics PhD student. We are not robotic we do not always have a logical explanation we often make decisions that don’t benefit our happiness, health or wealth.

They’re the things we do that are often irrational, at best loveable, and at worst, annoying to those we love. At the very heart of what makes us individuals are our idiosyncrasies.

Misbehaving richard