Tuesday, May 13, 2008

Thaler: Framing and Nudge

Richard Thaler, one of the top-guns in behavior economics, explains how to use nudge or framing to help people make decisions. 
In his new book, "Nudge," written with University of Chicago Law School professor Cass Sunstein, he looks at how policymakers might go about doing that. He and Mr. Sunstein make an argument for policies that guide people toward making optimal decisions while not depriving them of their ability to make a choice. They call this idea "libertarian paternalism." ("Why not paternal libertarianism?" asked Nobel laureate Daniel Kahneman at a recent event. "It's no worse," Mr. Thaler replied.)