University of Chicago’s Richard H. Thaler was awarded the 2017 Nobel Prize in Economics
- He is one of the founders of behavioural economics and finance
- He shed lights on how human weaknesses such as a lack of rationality and self-control can ultimately affect markets. Thaler developed the theory of “mental accounting”, explaining how people make financial decisions by creating separate accounts in their minds, focusing on the narrow impact rather than the overall effect.
- He is the co-author of the 2008 best-seller Nudge
Nudge Theory
- He gave nudge theory along with White House advisor Cass Sunstein
- This theory suggested that small incentives can prod people into making certain decisions. His work has informed politicians looking for ways to influence voters and shape societies at a time when budget deficits limited their scope to spend.
Thaler and Sunstein defined their concept as:
"A nudge, as we will use the term, is any aspect of the choice architecture that alters people's behavior in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting fruit at eye level counts as a nudge. Banning junk food does not."
Nobel Prize in Economics
- The Nobel Memorial Prize in Economic Sciences is commonly referred to as the Nobel Prize in Economics
- It is an award for outstanding contributions to the field of economics and generally regarded as the most prestigious award for that field
- The prize was established in 1968 by a donation from Sweden's central bank
- Although it is not one of the prizes that Alfred Nobel established in his will in 1895, it is referred to along with the other Nobel Prizes by the Nobel Foundation.
- Laureates are announced with the other Nobel Prize laureates and receive the award at the same ceremony
