Have you ever bought a pair of shoes that never really fit, but you kept wearing them in hopes you’d break them in? All because you didn’t want to feel your money had gone to waste—even as you felt blisters forming?

In this episode of Choiceology with Katy Milkman, we explore how focusing on past, irrecoverable costs can skew our judgment and future commitments.

Bill Kolb takes us inside the Evergreen Aviation & Space Museum in McMinnville, Oregon. He shares the story of “The Spruce Goose” seaplane and why its creator, Howard Hughes, was so committed to the project despite many challenges and several opportunities to back out.

Next, Katy speaks with Richard Thaler, economics Nobel laureate and Charles R. Walgreen Distinguished Service Professor of Behavioral Science and Economics at the University of Chicago Booth School of Business. Thaler reveals why we tend to dwell on sunk costs that cannot be recovered and shares insights from his updated book The Winner’s Curse: Behavioral Economics Anomalies, Then and Now.

Check out the additional papers mentioned in this episode: “Paying Not to Go to the Gym” by Ulrike Malmendier and Stefano DellaVigna and “The Realization Effect: Risk-Taking After Realized Versus Paper Losses” by Alex Imas.

Choiceology is an original podcast from Charles Schwab. For more on the show, visit schwab.com/choiceology.

If you enjoy the show, please leave a rating or review on Apple Podcasts.

Important Disclosures

The comments, views, and opinions expressed in the presentation are those of the speakers and do not necessarily represent the views of Charles Schwab.

Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

All corporate names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.

The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.

Investing involves risk including loss of principal.

The books How to Change: The Science of Getting from Where You Are to Where You Want to Be and The Winner's Curse not affiliated with, sponsored by, or endorsed by Charles Schwab & Co., Inc. (CS&Co.). Charles Schwab & Co., Inc. (CS&Co.) has not reviewed the books and makes no representations about its content.

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Every day, we face choices that could change outcomes in business, health, or life itself. Increasingly, computers are offering guidance. What happens when that advice clashes with human intuition?

In this episode of Choiceology with Katy Milkman, we explore the high-stakes friction between human intuition and algorithmic guidance.

Dean Oliver, a data scientist at ESPN and author of Basketball on Paperand Basketball Beyond Paper, tells the story of the 2008 Boston Celtics. Facing a crossroads on roster moves and trades, the team made a radical gamble: They relied heavily on advanced analytics to reveal what traditional scouting missed. This choice ignited a data revolution that changed professional basketball forever.

Next, Katy speaks with Jennifer Logg, an assistant professor of management at Georgetown University's McDonough School of Business. Logg shares her research on how people respond to computer-generated predictions. She reveals the specific moments when machine advice consistently outperforms human judgment—and the hidden dangers that emerge when those systems are built on flawed or biased data.

Choiceology is an original podcast from Charles Schwab. For more on the show, visit schwab.com/choiceology.

If you enjoy the show, please leave a rating or review on Apple Podcasts.

0:00 Introduction

1:00 Would You Trust an Algorithm Over a Friend for Cooking Advice?

2:36 This is Choiceology

3:11 The Boston Celtics’ Rebuild Meets Analytics

17:13 The Rise of Algorithm Trust

18:56 Why We Prefer Algorithms to People with Jennifer Logg

32:37 Trust Algorithms With Care

35:31 Final Thoughts & Next Time

Important Disclosures

The comments, views, and opinions expressed in the presentation are those of the speakers and do not necessarily represent the views of Charles Schwab.

Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

All corporate names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.

Investing involves risk including loss of principal.

The book How to Change: The Science of Getting from Where You Are to Where You Want to Be is not affiliated with, sponsored by, or endorsed by Charles Schwab & Co., Inc. (CS&Co.). Charles Schwab & Co., Inc. (CS&Co.) has not reviewed the books and makes no representations about its content.

0326-SA3N

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

It's a new season of Choiceology, an original podcast from Charles Schwab.

Each episode tells true stories involving high-stakes moments and explores the latest research to help you make better judgments and avoid costly mistakes.

This season, we go underground to one of the most dramatic mining rescues in history and step onto the court during a pivotal Boston Celtics roster shakeup. We hear from leading researchers in psychology and behavioral economics, such as Richard Thaler, Amy Edmondson, and more.

New episodes arrive every two weeks. Follow now in your favorite podcasting app.

Choiceology is an original podcast from Charles Schwab. For more on the show, visit schwab.com/podcast.

Important Disclosures

The comments, views, and opinions expressed in the presentation are those of the speakers and do not necessarily represent the views of Charles Schwab.

Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

All corporate names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.

Investing involves risk including loss of principal.

The book How to Change: The Science of Getting from Where You Are to Where You Want to Be is not affiliated with, sponsored by, or endorsed by Charles Schwab & Co., Inc. (CS&Co.). Charles Schwab & Co., Inc. (CS&Co.) has not reviewed the books and makes no representations about its content.

0326-G3CV

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.