Richard Thaler wins the Nobel Prize

Richard Thaler was awarded the 2017 Nobel prize in Economic Sciences for his work in incorporating psychological principles in the analysis of economic decision-making.

Richard Thaler is considered one of the fathers of behavioral economics and the concept of nudge. These topics were made popular in his best-selling book Nudge: Improving decisions about health, wealth, and happiness, co-authored with Cass Sunstein. Richard Thaler argues that institutions and public policies can help people make better choices through relatively small changes in the environment where people make decisions.

At the award ceremony, Richard Thaler told everyone a curious story about a dinner party between fellow economists. While dinner was being prepared, the guests were serving themselves with uncontrollable amounts of cashews. Thaler then decided to take the cashews away, and to his surprise the guests were quite satisfied by that initiative and thanked him. To Thaler, this story illustrates the paradox of decision making: people were happy because an option they favored was taken away, which directly contradicts the premises of neoclassical economics.

Watch the award ceremony: