

How To Work Around Your Own Irrationality | Richard Thaler
Dec 6, 2021
Richard Thaler, Nobel Prize winner in Economic Sciences, shares his insights on the complexities of human decision-making and habit formation. He introduces the concept of 'nudges,' small changes that can significantly influence choices, contrasting them with 'sludges' that complicate decisions. The discussion delves into behavioral economics and its real-world applications, including financial decision-making and climate change solutions. Thaler also highlights the importance of understanding our irrational behaviors to foster personal growth and happiness.
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Behavioral Science vs. Economics
- Behavioral science studies human behavior, not just economic models.
- It draws on economics, psychology, and other social sciences to understand decisions.
Humans vs. Econs
- Richard Thaler jokes that they study humans because they are more like Homer Simpson than homo economicus.
- This highlights that humans aren't always rational actors.
Nudges
- A nudge influences behavior without force or economic incentives.
- Automatic enrollment in 401Ks is an example, simplifying a beneficial choice.