You have to give to actually hold the product in hand — and it immediately want to buy. For which he was given the Nobel prize in Economics in 2017

You have to give to actually hold the product in hand — and it immediately want to buy. For which he was given the Nobel prize in Economics in 2017

On 9 October the Nobel prize in Economics for 2017 received the American Richard Thaler “for the contribution to the study of behavioral Economics”. “Medusa” asked a senior teacher of the higher school of Economics, the founder of the project Danil fedorovykh you to tell me how important behavioral Economics and how open Richard Thaler can affect the life of each of us.

What is behavioral Economics?

Economists a very long time ignored the fact that people are inherently irrational. In classical economic theory, man is a creature that has infinite computing power, and parses all the information and can always take the best possible decision. Richard Thaler and other researchers have shown that actually people don’t know how well-regarded, have limited strength of will, their rationality is very limited. To them no one came to mind, how can we simulate this situation, it’s not very clear how to simulate the behavior of a person if he does not use the maximum utility function. Thaler and other scientists have it explained to us.

Limited rationality: Richard H. Thaler developed the theory of mental accounting, explaining how people simplify financial decisions

— The Nobel Prize (@NobelPrize) October 9, 2017
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When and who first spoke about behavioral Economics?

The concept of “behavioral Economics” appeared in the 1970-1980-ies. It was developed by Nobel laureate Daniel Kahneman, Amos Tversky (he’s up to his Nobel prize did not live), and Richard Thaler, who co-authored many works of Kahneman written in the 80s. In 2002 for research in behavioral and experimental Economics Nobel prize was awarded to Kahneman — by the way, not an economist, and psychologist, and Vernon Smith. At the same time, it was logical to present the award and Richard Thaler, but the Nobel Committee apparently decided not to award so many behavioral economists immediately.

In General, all these studies are of interdisciplinary nature, reconciling Economics with psychology. Psychologists became interested in Economics, and economists have become interested in psychology. Economists realized that humans are not rational, so we need to see what is told about it in psychology, and psychologists realized that economists have developed a lot of interesting things that can be applied to the study of human behavior.

What is the contribution of Richard Thaler’s behavioral Economics?

Researchers in this area usually take the cases in which people, at first glance, behave irrationally, and try to find economic or psychological effect, which would explain why they act this way.