Abstract

It is safe to say Richard Thaler (b. 1945) has been a key actor, if not the principal protagonist of the Kahneman and Tversky-inspired behavioral economics that emerged in the 1980s, and which arose as the most important alternative to mainstream economics in the 2000s. Building on Heukelom (2014), and complementing Thaler (2015), this chapter seeks to describe and explain Thaler’s behavioral economics. I do so by discussing his work chronologically, and by showing which themes appeared when. The upcoming second section illustrates Thaler’s economic thinking before he became acquainted with the work of Kahneman and Tversky, and what this reveals regarding the better known papers and theories that followed later. Section three will then discuss Thaler’s documenting of descriptive fallacies of mainstream economics, which was the principal focus of the 1980s. The fourth section shows how this gathering of descriptive fallacies gradually developed into a program of designing actions and programs to make people behave more in accordance with the normative theory of mainstream economics in the 1990s, and how this eventually led to the formulation of a new overall program of libertarian paternalism, or nudging.