Richard Thaler won the 2017 Nobel Prize in Economics for contributions to behavioral economics.
Thaler’s research incorporated psychological insights into economic analysis. He studied how people make decisions when they use mental shortcuts, display inconsistent preferences, or respond strongly to gains and losses. These ideas challenge the assumption that people always behave like perfectly rational decision-makers.
His work covered mental accounting, the endowment effect, and limited self-control. Mental accounting describes how people categorize money in ways that can influence spending. The endowment effect is the tendency to value something more once it is owned.
Daniel Kahneman won the economics prize in 2002, not 2017, and is a frequent source of confusion. Thaler also popularized the idea of “nudges,” in which choice environments are designed to influence behavior without removing options.