NUDGE: Improving Decisions About Health, Wealth, and Happiness

by Richard Thaler & Cass Sunstein

Traditional economics assumes that humans are rational beings who make optimal decisions to maximize their utility. In reality, we frequently make poor decisions due to cognitive flaws, emotional impulses, lack of information or self-control. This book explains key behavioral economics principles, and how nudges can be used to help people make better decisions at individual, national and global levels.

In this summary, you'll learn:
• The key behavioral economics principles to understand why people behave the way they do. Find out about our 2 cognitive systems, common mental heuristics or biases, and why we make bad decisions;
• How you can help people to make better decisions yet retain freedom of choice using the Libertarian Paternalism approach;
• What "choice architecture" involves, when you should use nudges, and the tools you can use to design effective nudges;
• How sludge can create the opposite outcomes as nudges, and why/how to de-sludge; and
• The detailed real-world case studies to understand how nudges can be applied to address various challenges/goals including financial well-being (including retirement savings, debt management and insurance) and national/global issues (e.g. organ donation and climate change).

Who should read this:
• Leaders and policy-makers in all types of organizations, including businesses, government, social or non-profit organizations; and
• Anyone who wants to deepen their knowledge about behavioral economics, psychology or improve their decision-making skills.