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Nudge: Improving Decisions About Health, Wealth, and Happiness-Richard H. Thaler,Cass R. Sunstein

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Coming soon: Nudge: The Final EditionFrom the winner of the Nobel Prize in Economics, Richard H. Thaler, and Cass R. Sunstein: a revelatory look at how we make decisions—for fans of Malcolm Gladwell’s Blink, Charles Duhiggs The Power of Habit, James Clears Atomic Habits, and Daniel Kahnemans Thinking, Fast and Slow* More than 1.5 million copies sold* New York Times bestseller * Named a Best Book of the Year by The Economist and the Financial TimesEvery day we make choices—about what to buy or eat, about financial investments or our children’s health and education, even about the causes we champion or the planet itself. Unfortunately, we often choose poorly. Nudge is about how we make these choices and how we can make better ones. Using dozens of eye-opening examples and drawing on decades of behavioral science research, Nobel Prize winner Richard H. Thaler and Harvard Law School professor Cass R. Sunstein show that no choice is ever presented to us in a neutral way, and that we are all susceptible to biases that can lead us to make bad decisions. But by knowing how people think, we can use sensible “choice architecture” to nudge people toward the best decisions for ourselves, our families, and our society, without restricting our freedom of choice.

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Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler and‎ Cass R. Sunstein has a simple premise. Unlike classical economic theory, where people are fully rational and always do things in their best interest, we are really lazy, uninformed, and unmotivated. We make bad decision because we lack information, or space out, or are too stupid to investigate what descisions will make our lives better.Intuitively, this view appeals to me. One example: create online retirement forms with a default setting which generally benefit employees, rather than no setting at all. Most people don't really understand their retirement plans, if they even have one. So make their laziness work for them.Of course, the “Libertarian Paternalism” proposed in this work is problematic. Who makes the choices that we get to choose from? Can’t "they" rig the system for their benefit and not ours?Despite this, I think the author’s view of human nature is sound, and can lead to more intelligent discussions about what we, as a species and individuals in that species, can hope to accomplish.
No wonder Richard Thaler's work won him the Nöbel Prize in Economics! Built on the earlier work founding Behavioral Economics by Daniel Kahneman and Amos Tvarsky which de-throned the "Rational Actor" model of humans in Classical Economics, Kahneman and Tvarsky, joined by Paul Slovic, showed human thinking is hard-wired in evolution, beset by Heuristics and Biases which are provably non-rational. They answer the question often provoked by observations of others clearly acting against their self-interest. There has been 35 years of continuing research in this area, a Nöbel for Kahneman, even showing that Capuchin monkeys are hard-wired native economic thinkers and choosers. We act, as evolution indicates, for action in the short term, primarily in the lower level, fast thinking brain and with heuristics/algorithms sufficient to meet the test of "Probably Approximately Correct", with book of this name by Leslie Valiant. Humans are not randomly irrational, but predictably irrational, which is what makes The Nudge work effectively.Thaler gives us an alternative to formal control systems for humans based on rules, laws, behavioral/operant conditioning, "shoulds, oughts, musts". Humans ignore or rebel against the rules, and deny consequences for short term gains.Thaler's "Nudge" is the alternative, assuming people will act in their self-interest without depending or using rationality or reason. Thaler shows in his reserach and presents in his book how to shape choice using the newly discovered laws of predictable irrationality, or choice shaping.

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