Richard H. Thaler Quotes

specific values to objects. When they have to give something up, they are hurt more than they are pleased if they acquire the very same thing.

The three social influences that we have emphasized - information, peer pressure, and priming - can easily be enlisted by private and public nudgers. As we will see, both business and governments can use the power of social influence to promote many good (and bad) causes.

Or consider this one: people's judgments about strangers are affected by whether they are drinking iced coffee or hot coffee! Those given iced coffee are more likely to see other people as more selfish, less sociable, and, well, colder than those who are given hot coffee.27 This, too, happens quite unconsciously.

We can even see the legal institution of marriage as a precommitment strategy, not unlike that of Ulysses in approaching the Sirens, in which people knowingly choose a legal status that will protect them against their own errors.

suppose there was some medical procedure that will provide some modest health benefit but is extremely painful. However, the procedure is administered with a drug that does not prevent the pain but instead erases all memory of the event. Would you be willing to undertake this procedure?

One overly simplistic idea is that we can improve student performance by just by giving financial incentives to parents, teachers, or kids. Unfortunately, there is little evidence that such incentives are effective, but nuances matter.

John Rawls (1971) called the publicity principle. In its simplest form, the publicity principle bans government from selecting a policy that it would not be able or willing to defend publicly to its own citizens.

By properly deploying both incentives and nudges, we can improve our ability to improve people's lives, and help solve many of society's major problems. And we can do so while still insisting on everyone's freedom to choose.

Doctors are crucial choice architects, and with an understanding of how Humans think, they could do far more to improve people's health and thus to lengthen their lives.

there is no question that social pressures nudge people to accept some pretty odd conclusions - and those conclusions might well affect their behavior.

Trayless cafeterias. Cafeteria managers have been taking a keen interest in reducing food waste. Seeing how easy it is to load up a tray with extra food that often goes uneaten and extra napkins that go unused, curious managers and students at Alfred University in New York tested a trayless policy over two days. When trays weren't offered, food and beverage waste dropped between 30 and 50 percent!

Wealth, too, is often separated into various mental accounts. At the bottom of this hierarchy sits the money that is easiest to spend: cash.

individual risk taking, especially in the domain of risks to life and health.

Compare subliminal advertising to something just as cunning. If you want people to lose weight, one effective strategy is to put mirrors in the cafeteria.

Hundreds of studies confirm that human forecasts are flawed and biased. Human decision making is not so great either. Again to take just one example, consider what is called the "status quo bias," a fancy name for inertia. For a host of reasons, which we shall explore, people have a strong tendency to go along with the status quo or default option.

On traditional economic theory:
We do not play chess as if we were a grandmaster, invest as if we were Warren Buffett, or cook like an Iron Chef. It is more likely we cook like Warren Buffett, who loves to eat at Dairy Queen.

My hunch is that as the importance of a decision grows, the tendency to rely on quantitative analyses done by others tends to shrink. When the championship or the future of the company is on the line, managers tend to rely on their gut instincts.

The first is that seemingly small features of social situations can have massive effects on people's behavior; nudges are everywhere, even if we do not see them. Choice architecture, both good and bad, is pervasive and unavoidable, and it greatly affects our decisions. The second claim is that libertarian paternalism is not an oxymoron. Choice architects can preserve freedom of choice while also nudging people in directions that will improve their lives.

People think about life in terms of changes, not levels. They can be changes from the status quo or changes from what was expected, but whatever form they take, it is changes that make us happy or miserable.

Psychologists tell us that in order to learn from experience, two ingredients are necessary: frequent practice and immediate feedback.

Self-control problems can be illuminated by thinking about an individual as containing two semiautonomous selves, a far-sighted "Planner" and a myopic "Doer." You can think of the Planner as speaking for your Reflective System, or the Mr. Spock lurking within you, and the Doer as heavily influenced by the Automatic System, or everyone's Homer Simpson. The Planner is trying to promote your long-term welfare but must cope with the feelings, mischief, and strong will of the Doer, who is exposed to the temptations that come with arousal. Recent research in neuroeconomics (yes, there really is such a field) has found evidence consistent with this two-system conception of self-control. Some parts of the brain get tempted, and other parts are prepared to enable us to resist temptation by assessing how we should react to the temptation.1 Sometimes the two parts of the brain can be in severe conflict - a kind of battle that one or the other is bound to lose.

It is time to stop making excuses. We need an enriched approach to doing economic research, one that acknowledges the existence and relevance of Humans.

Unrealistic optimism is a pervasive feature of human life; it characterizes most people in most social categories. When they overestimate their personal immunity from harm, people may fail to take sensible preventive steps. If people are running risks because of unrealistic optimism, they might be able to benefit from a nudge. In fact, we have already mentioned one possibility: if people are reminded of a bad event, they may not continue to be so optimistic.

PROBLEM 1. Assume yourself richer by $300 than you are today. You are offered a choice between A. A sure gain of $100, or [72%] B. A 50% chance to gain $200 and a 50% chance to lose $0. [28%] PROBLEM 2. Assume yourself richer by $500 than you are today. You are offered a choice between A. A sure loss of $100, or [36%] B. A 50% chance to lose $200 and a 50% chance to lose $0.

We don't have to stop inventing abstract models that describe the behavior of imaginary Econs. We do, however, have to stop assuming that those models are accurate descriptions of behavior, and stop basing policy decisions on such flawed analyses.

MBA students are not the only ones overconfident about their abilities. The "above average" effect is pervasive. Ninety percent of all drivers think they are above average behind the wheel,

To approach these problems we once again rely on one of our guiding principles: transparency.

So, we experience life in terms of changes, we feel diminishing sensitivity to both gains and losses, and losses sting more than equivalently-sized gains feel good.