'Nudging' people to make better choices

Nobel winner Richard Thaler's formalisation of economic behaviour that is not rational in the traditional sense reframes economic questions in ways that can improve government policies

Megha Patnaik 

Megha Patnaik Economists design policies based on models that assume individuals behave rationally. Presented with a set of choices, we may expect a person to decide on the option that gives her the best outcome. In reality, decision-making involves limited time and incomplete information. In addition, options may be complex and may require significant cognitive effort to evaluate and compare. Thus, it is not surprising that humans often do not behave as rationality would predict.  Acknowledging the limitations of assuming rational choice and understanding behavioural aspects of ...

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First Published: Tue, October 10 2017. 22:39 IST