Behavioural economics is now becoming mainstream-and is increasingly being made use of by policymakers. Much of this came from academics at the University of Chicago where, interestingly, Thaler would eventually take up residence. This twin-track approach helped Thaler to challenge the considerable resistance that he faced from proponents of the rational-choice model in the mid-1980s. Another important ingredient was that he undertook numerous experiments on students to test his ideas for empirical robustness.

Key to Thaler’s success were the collaborations he formed with other academics-in the fields of economics, psychology and law. He subsequently developed the concept of ‘mental accounting’ and the ‘planner-doer’ model of self-control.

Thaler’s journey began in 1978, when he began to make a list of anomalies that the rational-choice model could not explain. Nudges can also be used to increase organ donation rates and encourage people to pay their taxes. For example, such initiatives can help individuals to save for retirement or lead a healthier lifestyle. Thaler is best known today for his work on ‘nudges’-helping people to make better decisions by changing the way in which their choices are presented, and applying default options and other measures. While Thaler was not the first to explore these issues (in particular, Herbert Simon, Daniel Kahneman and Amos Tversky went before him), it was he who developed behavioural economics as a discipline, and challenged the prevailing paradigm head-on. In contrast, the behavioural model acknowledges that we are ‘human’ and that we can be manipulated, make mistakes, and find it difficult to follow and stick to the right path. Thaler calls these rational decision-makers ‘econs’. The standard paradigm assumes that individuals process relevant information objectively, which they optimise to make good, consistent choices. Behavioural economics is the application of psychology to explain behaviours that cannot be readily accounted for by the standard ‘rational-choice’ model. Thaler for his contributions to behavioural economics. On 9 October 2017, the Royal Swedish Academy of Sciences awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to Richard H. The science of misbehaving: Richard Thaler wins the Nobel Prize 26 October 2017

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Misbehaving richard