Works
- Toward a Positive Theory of Consumer Choice, Journal of Economic Behavior and Organization 1, no. 1, 1980
- An Economic Theory of Self-Control, Journal of Political Economy, 1981
- Mental Accounting and Consumer Choice, Marketing Science, 1985
- Save More Tomorrow: Using Behavioral Economics to Increase Employee Saving, Journal of Political Economy, 2004
- Nudge: Improving Decisions About Health, Wealth, and Happiness, 2008
In Tactics of Organizational Politics
Ideas
Choice architecture and defaults. Choice architecture is the way options are presented, and it always influences choice, so there is no neutral design. A nudge is any feature of that design which predictably shifts behavior without forbidding options or materially changing incentives; defaults are the strongest example, because whatever happens when people do nothing is what most people end up with.
Mental accounting. People sort money into separate mental accounts by source and intended use and judge spending against the account it falls in, so money is less interchangeable in practice than standard economics assumes. The same sum can therefore feel trivial in one account and unacceptable in another.
The planner and the doer. Thaler and Shefrin model a person as an organization with a farsighted planner and a series of shortsighted doers who care about the present. Self-control problems arise because immediate rewards tempt the doer, and the planner must use rules and commitments to restrain it.
Committing now to act later. In the Save More Tomorrow program, employees agree in advance to put part of their future pay raises into retirement saving, so take-home pay never falls. In the first implementation, 78 percent of those offered the plan joined, 80 percent of them stayed through the fourth raise, and average saving rates rose from 3.5 percent to 13.6 percent over 40 months. Caveat: The U.S. Department of Labor's Clearinghouse for Labor Evaluation and Research rated the study's causal evidence low, because the comparison of participants and nonparticipants used no statistical controls.
What it explains
Thaler explains why the design of a choice, its default, its budget category, its timing, moves decisions without any argument being made. Inside organizations, the person who sets the default or the accounting treatment often decides the outcome.
Tactics that draw on Richard H. Thaler (31)
- Agenda Control
- Austerity Optics
- Budgetary Camouflage
- Burden of Proof Shift
- Burn Rate Trap
- Calibrated Voluntary Severance
- Capex Shield
- Center of Excellence Creep
- Choice Architecture
- Clearing the Path
- Cost Center Labeling
- Cultural Artifact Strategy
- Decoy Option
- Deferred Cost Slate
- Engineered Brain Drain
- Failure Dilution
- Fear of Speaking First
- Future-Dated Commitment
- Hostile Office Architecture
- Normalization of Deviance
- Opt-Out Illusion
- Permission Structure Trap
- Pet Project Rider
- Short-Term Focus Trap
- Silence-Means-Yes Deadline
- Standardizing Work in Software
- Temporary Fix Inertia
- Uniform Hurdle Rates
- Vision Vacuum Annexation
- Writing the Data Dictionary
- Zero-Based Reset
In Thinking Tools
Known for
A University of Chicago economist who received the 2017 Nobel Memorial Prize in Economic Sciences for contributions to behavioral economics. His 1980 paper cataloged departures from standard consumer theory, among them the endowment effect and the tendency to honor sunk costs.