Richard Thaler has won the Nobel Prize in economics for 2017.
The Royal Swedish Academy of Sciences has awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2017 to Richard Thaler “for his contributions to behavioural economics.”
Richard Thaler ha been using psychology to determine market outcomes. This includes how limited rationality, social preferences, and lack of self-control contribute to human decisions.
“Richard Thaler’s contributions have built a bridge between the economic and psychological analyses of individual decision-making,” The Royal Swedish Academy of Sciences said in a statement
. “His empirical findings and theoretical insights have been instrumental in creating the new and rapidly expanding field of behavioural economics, which has had a profound impact on many areas of economic research and policy.”
Richard Thaler’s therories on psychology and economies have provided insight on how humans weigh in on making purchases. This includes looking at mental accounting, which is how humans break down value of items and determine how purchases will affect their financial accounts.
Richard Thaler has also used his theories to determine how customers perceive fairness. Some corporation have used this to determine the proper time for price increases. For example, customers may find it unfair for a price increase to occur when demand does, but not when rising costs occur.
Richard Thaler’s contributions also include investigating how a lack of self-control can financially affect people. He shows that this issue can make it hard for some people to save back money for retirement. However, he also notes that nudging can be used to help people save their money back.
As of this writing, William White did not hold a position in any of the aforementioned securities.
