Richard Thaler

I'll tell you a funny story.

When my daughter Maggie was in junior high school, we were living in Ithaca, New York.

Friday nights, there was an after school skiing.

And one night she says, oh, I'm not going to go skiing this Friday.

There's a dance at school.

I'm going to go.

Oh, OK, great.

The next week, she says, I'm not going skiing this week.

My friend is having a party.

So I said, Maggie, you know, we paid a lot of money for those ski trips.

And she says, sunk costs.

So this is the daughter of a behavioral economist.

You know, I think if you're aware, then you can catch yourselves and make fewer of the mistakes.

I've created a monster.

We had a philosophy, and we gave it a brilliant name, called libertarian paternalism.

The idea of libertarian paternalism is you want to help people, but not force anybody to do anything.

How can you do that?

So that's the idea of a nudge.

You do something that influences their behavior, but doesn't mandate it.

A place where I've done a lot of research and where these ideas have come into play is devising retirement savings plans.