Richard Thaler
12 key ideas across 2 books, each explained in our own words.
Nudge
- IDEA 1
Choice architecture
How options are presented shapes what people pick. There is no neutral design, so design deliberately.
- IDEA 2
Defaults are powerful
Most people stick with the default option. Making the better choice the default, like automatic pension enrolment, changes outcomes at scale.
- IDEA 3
Libertarian paternalism
You can steer people toward better choices while still leaving them free to opt out.
Misbehaving
- IDEA 1
Supposedly irrelevant factors
Standard economics says things like sunk costs or framing shouldn't matter. In practice they change behaviour all the time.
- IDEA 2
Mental accounting
People treat money differently depending on where it came from or what it's labelled for, even though money is interchangeable.
- IDEA 3
The endowment effect
People demand more to give up something they own than they would pay to get it.
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