Thaler developed the theory of “mental accounting,” explaining how people make financial decisions by creating separate accounts in their minds, focusing on the narrow impact rather than the overall effect.
His research on “fairness,” which showed how consumer concerns may stop firms from raising prices in periods of high demand, but not in times of rising costs, has also been influential, according to the Swedish academy. He revealed how people succumb to short-term temptations, which is why many people fail to plan and save for old age.
Also one of the few economists focusing on behavior to ever win a Nobel.
E: also here's a video of Gene Fama and Thaler discussing their takes on market efficiency: https://www.youtube.com/watch?v=bM9bYOBuKF4
Submitted October 09, 2017 at 02:32PM by MasterCookSwag http://ift.tt/2fYMZ8g
