Richard H. Thaler won the Nobel Prize for Economics, a reward for 40 years of work spent studying human bias and temptation when many fellow economists preferred to view people as rational actors.
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
Thaler, 72 and a professor at the University of Chicago, is one of the founders of behavioral economics and finance, a field which once drew derision from some academics before entering the mainstream over the past decade. He was made a Nobel laureate for shedding light on how human weaknesses such as a lack of rationality and self-control can ultimately affect markets.
The co-author of the 2008 best-seller “Nudge” has “built a bridge between the economic and psychological analyses of individual decision-making,” the Royal Swedish Academy of Sciences said in a statement.
Former U.S. President Barack Obama and ex-U.K. Prime Minister David Cameron both appointed teams to study if behavioral economics could be used to save their governments money and drive economies. Behavioral policy making is now spreading through the world, from Singapore to Australia