Richard Thaler was awarded the 2017 Nobel Memorial Prize in Economics for his contributions to behavioral economics. His work shows how human traits like biases and limited rationality affect economic decision making. He incorporated psychological insights into economics by developing theories of mental accounting and self-control problems. Thaler's research provided empirical evidence that individual psychology still influences outcomes even in complex market interactions. His findings have implications for improving policies and helping people make better personal decisions.

1. Nobel Prize Economics 2017: Richard Thaler
Behavioral Economics
Dr.C.Muthuraja, M.A, M.Phil, PhD
Head, Post Graduate & Research Department of Economics
The American College, Madurai - 625 002, Tamil Nadu
(cmuthuraja@gmail.com) - (M-09486373765)
(Presented @ Noble Day Celebration organized by Internal Quality Assurance Cell,
The American College, Madurai on 11.12.2017)
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2. OUTLINE
♦Introduction
♦Nobel Prize in Economics
♦Richard Thaler – Profile
♦Economics
♦Behavioral Economics
♦Understanding the Psychology of
Economics
♦Applications & Actions
♦Appeal
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3. Introduction
♦ Nobel economics prize-Awarded to Richard
Thaler, University of Chicago-Contributions to
behavioral economics-’Understanding the
Psychology of Economics’
♦ The Nobel committee said Thaler's work shows
how human traits affect individual decisions as
well as market outcomes
♦ Thaler, 72, "is a pioneer in behavioral economics, a
research field in which insights from psychological
research are applied to economic decision
making,"
♦ Incorporates more realistic analysis of how people
think & behave when making economic decisions
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4. Richard Thaler : American Economist
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♦ Born September 12, 1945, East Orange, New Jersey, U.S
♦ Bachelor’s degree in economics @
Case Western Reserve University in Cleveland, Ohio (1967)-
Master’s (1970) and doctoral (1974) degrees in economics-
University of Rochester, New York
♦ Taught @Graduate School of Management at Rochester (1974–
78) & Associate professor in 1980 and full professor in 1986 at
the Graduate School of Business and Public Administration at
Cornell University
♦ Henrietta Johnson Louis Professor of Economics at Cornell
(1988–95)-Professorships of behavioral science and economics
at the University of Chicago’s Booth School of Business
♦ Author : Nudge: Improving Decisions on Health, Wealth, and
Happiness (2008, coauthored with Cass R. Sunstein)
and Misbehaving: The Making of Behavioral Economics (2015)
♦ Applied in health care, energy, environmental protection,
consumer protection, education, unemployment, and national
security

5. Sveriges Riksbank Prize in Economic Sciences in
Memory of Alfred Nobel
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♦ The Nobel Memorial Prize in Economic
Sciences regarded as the most prestigious award
for that field
♦ Awarded for Outstanding contributions in
Economic Sciences
♦ Location Stockholm, Sweden
♦ Presented by Royal Swedish Academy of
Sciences
♦ Reward(s)- 9 million SEK (2017)
♦ First awarded 1969
♦ Currently held by Richard H. Thaler (2017)
♦ Website NobelPrize.org

6. Economics Basics
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♦ Oikonomia (Greek)-Household Management
♦ Arts/Science-Science: Cause & Effect Relations
♦ Relevant in our globalized, financialized society
♦ The economy is part of our collective conscious & links
personal finances to big business and international trade
♦ Deals with individual choice, money and borrowing,
production and consumption, trade and markets,
employment and occupations, asset pricing, taxes +++
♦ Study of rational human behavior in the endeavor to
fulfill needs and wants given a world with scarce
resources
♦ To understand how individuals, companies, and nations
as a whole behave in response to certain material
constraints

7. Understanding Economics !
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8. Economics Everywhere !
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9. Behavioral Economics Basics
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♦ Rational Choice
♦ Bounded Rationality
♦ Mental Accounting
♦ Limited Information: The Importance of Feedback
♦ “Irrational” Decision Making: Psychology of Price
♦ Availability and Affect
♦ Temporal Dimensions
♦ Time Discounting and Present Bias
♦ Diversification Bias and the Empathy Gap
♦ Forecasting and Memory - Social Dimensions
♦ Trust and Dishonesty - Fairness and Reciprocity
♦ Social Norms - Consistency and Commitment
♦ Interdisciplinary Context - Generalizability
♦ Applications: BE & Behavior Change - Ethical issues

10. Behavioral Economics Basics
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11. Behavioral Economics Basics
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12. SINCE 1881
♦ Work on how deviations from ideally rational behavior
systematically shape economic decisions
♦ Self-control problems that prevent agents from carrying
out their optimal plans, even if they can compute them
♦ How social preferences are essential for economic
decision-making
♦ Provided empirical evidence suggesting that individual
psychological aspects do not disappear when many
economic agents interact together in markets
♦ His works : Theory of mental accounting, a new approach
to boundedly rational behavior, with a new framework for
self-control problems; and his work on social preferences
♦ Shown how policies based on insights from behavioral
economics can help individuals make better decisions
Contributions by Richard Thaler

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Contributions by Richard Thaler

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♦ May be all we need to make better decisions for ourselves
♦ To improve the running of several key public services
♦ Powerful impact on even our biggest societal challenges
♦ Can help people to make better choices for themselves
♦ Powerful tool for shaping government policy
♦ But by its very nature, it belongs to all of us
♦ Should be made transparent and available to those looking
to make small changes in their lives
♦ We face thousands of decisions in our day-to-day lives,
some more significant than others – what to eat, what to
wear, whether to buy, how much to save
♦ hown how we can use the behavioural research to change
policy, in ways that help people make better choices for
themselves
Implications of Richard Thaler’s Work

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Applications & Actions: Richard Thaler’s Work

16. SINCE 1881
Contributions by Richard Thaler

17. APPEAL
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RATIONAL DECISION MAKING
BEHAVIORAL ECONOMICS EDUCATION
PLEASE
EACH ONE TEACH ONE
IF NOT
EACH ONE CATCH ONE AND TEACH ONE

18. QUESTIONS PLEASE…
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