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Today\u2019s guest is David Dunning, professor of psychology at the University of Michigan - known from the "Dunning-Kruger effect" - who focuses in this interview on the psychology underlying human misbelief. In the interview, we talk about what is going on in the human psyche that's allowing people to trust, and why people trust other people when, according to the economics of rational analysis, they shouldn't. Trust often turns out to be not really an economic decision. When you go to a doctor there's a norm that if your doctor says X, unless you have excellent reasons to ignore him, you should go with the doctor\u2019s advice.

Trust is crucial not just for established relationships. It\u2019s also especially vital between strangers with no responsibility toward each other outside of a single interaction. Psychologists found \u201cexcessive\u201d trust rates rising much higher than anticipated, given people\u2019s aversion to risk and rather cynical expectations of their peers\u2019 trustworthiness. Many trust even though they expect their trust not to be honored.

David is most well-known for the Dunning-Kruger effect when a person's lack of knowledge and skills in a particular area causes him to overestimate his own competence.

We talk about the 1986 negotiations between Reagan and Gorbachev, both walked away from a potentially historic agreement that would have eliminated nuclear threats. They famously walked away from a deal because they couldn't get themselves to trust one another.