Nobel Prize in Economics Awarded to Richard Thaler
An American academic Richard Thaler, whose research into behavioural economics showed people do not always make rational financial decisions has been awarded the 2017 Nobel Economics Prize.
His works in field of Economy
The 72-year-old co-author of the 2008 best-seller Nudge has “built a bridge between the economic and psychological analyses of individual decision-making,”
By exploring the consequences of limited rationality, social preferences, and lack of self-control, he has shown how these human traits systematically affect individual decisions as well as market outcomes.
Thaler said he investigates the implication of “relaxing” the standard economic assumption that everyone is rational and selfish, “instead entertaining the possibility that some of the agents in the economy are sometimes human”.
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.
His research on “fairness”, which showed how consumer concerns may stop firms from raising prices in periods of high demand, but not in times of rising costs, has also been influential
His research was praised for incorporating psychological assumptions into analyses of economic decision-making.