This is hidden brain.
I'm Shankar Vedantam.
Economic theory rests on a simple notion about human beings.
People are rational.
They seek out the best information.
They measure costs and benefits and maximize pleasure and profit.
This idea of the rational economic actor has been around for centuries.
But about 50 years ago, two obscure psychologists shattered these foundational assumptions.
The psychologists showed that people routinely walk away from good money, and they explained why once people get in a hole, they often keep digging.
The methods of these psychologists were as unusual as their insights.
Daniel Kahneman and Amos Tversky spent hours together talking.
They came up with playful thought experiments.
They laughed a lot.
We found our own mistakes very funny.
What was fun was finding yourself about to say something really stupid.
This is Daniel Kahneman.
The insights he developed with Amos Tversky, who passed away in 1996, transformed the way we understand the mind.
That transformation had philosophical implications.
The stories about the past are so good that they create an illusion that life is understandable and that's an illusion.
And they create the illusion that you can predict the future, and that's an illusion.