People make just as many mistakes when the stakes go up, maybe more.

Richard Thaler

Richard Thaler

Profession: Economist
Nationality: American


People make just as many mistakes when the stakes go up, maybe more. Richard Thaler

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Lotteries are just one way to provide positive reinforcement. Their power comes from the fact that the chance of winning the prize is overvalued.

Fortunately, economists open to new ways of thinking are finding novel ways to use supposedly irrelevant factors to make the world a better place.

Whenever I'm asked to autograph a copy of 'Nudge,' the book I wrote with Cass Sunstein, the Harvard law professor, I sign it, 'Nudge for good.' Unfortunately, that is meant as a plea, not an expectation.

Many problems are so complex that even if we had the money to fix them, we wouldn't know how to do it. Fixing inner-city schools, reducing obesity, creating peace in the Middle East are just a few examples.

Shopping for an annuity with hundreds of thousands of dollars at stake can be daunting, even for an economist.

In some ways, the finding that financial education doesn't provide long-term payoffs is hardly surprising. After all, how much do you remember from your high school chemistry class? Unless you use chemistry at work, you probably don't recall much about ionic bonding.

It makes sense for social scientists to become more involved in policy because many of society's most challenging problems are, in essence, behavioral.

Economists discount any factors that would not influence the thinking of a rational person.

A nudge is some feature of the environment that changes the behaviour of humans but would not change the behaviour of rational economic agents, what we call Econs.

I have an agent, John Brockman, who is an agent to many academic authors like Dan Gilbert and Steven Pinker, and he's very good at conning academics into writing books. He pulled this trick on me.

We behavioralists differ from our more traditional brethren in the way we characterize agents in the economy.

I try to teach people to make fewer mistakes. But in designing economic policies, we need to take full account of the fact that people are busy, they're absent minded, they're lazy, and that we should try to make things as easy for them as possible.

Everyone knows it's dangerous to ingest gasoline or to inhale its fumes. But I am starting to believe that merely thinking about the price of gasoline can damage cognitive processing.

Traditional economics is based on imaginary creatures sometimes referred to as 'Homo economicus.' I call them Econs for short. Econs are amazingly smart and are free of emotion, distraction or self-control problems. Think Mr. Spock from 'Star Trek.'