Nudges: They work because we humans aren’t entirely rational beings, right?

Right. On Monday, when I heard I won the Nobel, I put on an old sweatshirt with the words “Quasi Rational” on it.

What are our most important quirks?

I’ve made a list of the dumb stuff people do. Not all of these things were committed by me. A lot were.

One big one is sunk costs.

What does that mean?

Sunk costs? We pay too much attention to them. Like this: A friend of mine and I, back in Rochester, were given two tickets to a basketball game that was going to take place in Buffalo. But there was a big snowstorm. My friend said to me there’s no way we’re going to that game now, in the snowstorm, and we didn’t go. But, he said, you know, if we’d paid for those tickets ourselves, we’d be going.

It felt different because we didn’t pay: We had no sunk costs. If we’d paid, it would’ve been different. That’s crazy, for classical economics, but it’s true. So sunk costs got on my list.

What else is on there?

I had a friend who got terrible hay fever when he mowed his lawn. I said why don’t you hire some kid to do it for you? This was years ago. He said it would cost $10 and he wouldn’t pay it. So I asked, would you mow your neighbor’s lawn for $20? He said, come on! Not even for $50!

But to traditional economics, that makes no sense. And my friend was an economist!

You know, the supply price and the demand price should be roughly the same. You’re not supposed to have two different prices. According to economists. But even my friend, an economist, didn’t think the way economists are supposed to think.

So I made this list of the funny things I saw people doing. There’s more of them in my book, “Misbehaving,” things that didn’t make sense with traditional theory. That’s how it all started. The theory had to be changed.