The Prize in Economic Sciences 2017 – Press release

Claims Supported by This Source

1. The 2017 prize went to Richard H. Thaler (for his contributions to behavioural economics). He showed how three traits—limited rationality, social preferences, and lack of self-control—systematically affect individual decisions and market outcomes.
2. Limited rationality: "Mental accounting," where people simplify financial decisions by creating separate accounts in their minds. Explains the "endowment effect," where people value an item more highly when they own it, due to a tendency to avoid losses. One of the founders of behavioural finance.
3. Social preferences: Consumers' concern for fairness can deter firms from raising prices when demand is high (though not when costs rise). Devised the dictator game.
4. Lack of self-control: The planner-doer model. Succumbing to short-term temptations is a key reason why plans for retirement savings or healthy living fail. Showed that nudges can help with self-control in pension savings.

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