Nudge

In Nudge, Richard Thaler, a behavioral economics professor, and Cass Sunstein, a prominent legal scholar, make a case for what they call “libertarian paternalism”—a term they concede is off-putting. But it captures the delicate line they walk in a provocative and entertaining book whose ideas are gaining currency among policy-makers.

Parting ways with classical economics, the authors insist that humans are not intrinsically rational, and that this is exacerbated by the array and complexity of choices we now have to make on a daily basis. In fact, the higher the stakes (for example, what to do about retirement or estate planning), the less likely we are to carefully weigh our options.

While humans may be irrational, they are predictably so—and the authors argue that institutions like government use the insights of behavioral science to restructure the environment in which people make choices (they call it “choice architecture”) and gently nudge people towards making better ones while still honoring freedom of choice. For example, locating fresh fruit and not donuts at eye level in school cafeterias is a simple way to  encourage  young people to eat better. The authors apply this basic principle to a wide range of areas, coming up with some fascinating proposals.  If you are interested in understanding choice,decision-making and the fine art of persuasion, this book needs to be in your arsenal of great psychology books.

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