Traditional economics assumes rational actors. In daily decision-making, however, we all make decisions influenced by our biases and beliefs, whether which car to buy or who to vote for at the polls. As a result, outcomes often deviate from the standards of rationality assumed by economics. Combining discoveries in human psychology with a practical understanding of economics – including incentives and market behavior – Booth Professor Richard Thaler, recipient of the 2017 Nobel Prize in Economics, and Harvard Law School Professor Cass Sunstein, recipient of the 2018 Holberg Prize and former Administrator of the White House Office of Information & Regulatory Affairs, have revolutionized our understanding of how human behaviors can impact markets. Their work highlights opportunities to drive decision-making in a direction that improves outcomes for businesses, government, and society as a whole.
The Becker Friedman Institute for Economics welcomed Thaler and Sunstein, authors of the best-selling book “Nudge: Improving Decisions About Health, Wealth, and Happiness,” for a discussion about the power of behavioral economics to affect decision-making. BFI Director Michael Greenstone, the Milton Friedman Professor of Economics, the Harris School and the College, moderated the discussion.