Our firm has been binge reading behavioral economics books for the past year. Compliance remains a people business. And behavioral economics is the study of why people do what they do.
In their book, Nudge, Richard Thaler and Cass Sunstein look at behavioral economics as a type of “choice architecture.” The book describes how choice architecture touches various aspects of our lives—whether we opt in or out of something, and how we are more likely to make certain selections based on how they are worded or organized because of the way we think. Thaler and Sunstein argue that if we understand behavioral economics, including biases, etc., we understand how the way in which we organize information and choices make it more or less likely someone will choose a particular option. In October, Thaler won the Nobel Prize for Economics for his work.
