The Nobel Prize in Economics has been awarded to Richard H. Thaler for his contribution to the study of behavioural economics. Thaler is an American economist and professor at the Booth School of Business at the University of Chicago. His studies analyse human behaviour and the way in which people make their economic and consumer choices.

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Limited rationality: Richard H. Thaler developed the theory of mental accounting, explaining how people simplify financial decisions

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Read also: What is behavioural economics

In the book Nudge (published in Italy by Feltrinelli) written together with Cass Sunstein, Thaler divided the world into two categories: "econs", who always make their choices rationally, and "humans" — that is, all of us — who do not always behave rationally. There are, in fact, certain mechanisms that condition the way we act, such as that of "anchors" and that of "availability", according to which we tend to form a judgement on the basis of what we already know. If, for example, we are asked how many inhabitants a given city has and we do not know the answer, we instinctively refer to the place where we live and give an estimate up or down depending on whether our town has more or fewer inhabitants (a number that serves as an anchor). This also happens when we buy something, which is why, if we find three types of snack at the checkout, we tend to pick the one at the intermediate price — consequently, sellers can raise the price we are willing to pay for a product. According to the availability mechanism, on the other hand, our mind relies on lived experience: if everyone in our office is ill, we will spontaneously say "there are a lot of flu cases this year!", when in all likelihood there are actually fewer than in the previous year.

• The Nobel Prize in Medicine goes to the researchers behind the biological clock
• The Nobel Prize in Physics goes to Weiss, Barish and Thorne, the first to have detected gravitational waves
• The Nobel Prize in Chemistry goes to Frank, Dubochet and Henderson for developing cryo-electron microscopy
• The Nobel Prize in Literature goes to Kazuo Ishiguro, author of Never Let Me Go
• The Nobel Peace Prize goes to the International Campaign to Abolish Nuclear Weapons

Thaler stated, reached by telephone during the announcement (while it was 5 o'clock in the morning in Chicago), that the most important discovery is that "human beings are the most important economic agent, and economic models should take this into account".

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Watch the announcement of the 2017 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel! #NobelPrize

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What is the Nobel Prize in Economic Sciences

The Nobel Prize in Economics was established in 1968 by Sveriges Riksbank, the Swedish central bank. The first to receive it were the Norwegian Ragnar Frisch and the Dutchman Jan Tinbergen the following year, for the development of dynamic models applicable to the analysis of economic processes. The prize is awarded by the Royal Swedish Academy of Sciences, which is based in Stockholm.