Richard H. Thaler's Blog, page 3

It seems like the whole office is off in December. Can anything be done about it?

If you work in an office, you probably get an annual allotment of days off every year. Depending on where you work, those vacation days may carry over to the next year. In many places they don't, though. So what happens in a use-them-or-lose-them office? Everyone takes their unused vacation days at the end of the year, leaving offices so empty that even the few people working are less productive because they can't complete any task that depends on their vacationing colleague's input.

December ...

OIRA's goal: Regulation for humans, not econs

Type "OIRA dashboard" into Google. The first hit? RegInfo.gov, a new web site that demystifies the opaque subject of rules and regulation in Washington by enabling people to track their progress throughout a review process.

The site's launch coincides with Nudge co-author Cass Sunstein's first public remarks since taking over the Office of Information and Regulatory Affairs (OIRA), the office in charge of reviewing, developing, and overseeing regulations across the federal government...

Some fresh ground pepper for your chocolate souffle?

Dan Goldstein at Decision Science News recounts a wonderful little story featuring Shlomo Benartzi.

Decision Science News was having dinner with Shlomo Benartzi recently, not far from his beloved Four Seasons Hotel in New York. At the end of the meal, a chocolate souffle was ordered. Halfway through the souffle, Benartzi asked "would you like any more of this?" Decision Science News declined and watched as Benartzi took the peppermill in hand and peppered the souffle. The website was thinking...

The incredible incorrupti-bill!

How do you help people fight petty corruption in their country? An NGO called 5th Pillar has come up with an ingenious idea that works in India: A zero rupee note. More than one million have been given out. Public officials recoil when citizens hand them one.

(5th Pillar President Vijay) Anand explained that a number of factors contribute to the success of the zero rupee notes in fighting corruption in India. First, bribery is a crime in India punishable with jail time. Corrupt officials...

Three reasons why a little extra optimism is a good thing

Cade Massey in Qn:

There is a fairly widely held belief among some researchers that some optimism is good. It's a little bit like red wine: In moderate amounts, it's good for you.

There are a number of reasons why it might be good to be optimistically biased. For example, if people are by nature a little too risk-averse, a little optimism helps counterbalance that, gets them to take a few risks they might not otherwise.

Another reason is that there is, in economic-speak, positive utility from...

Assorted links

1) The behavioral economics explanation for why more poker hands played means less money won.

2) Waiters who compliment customers get three percent bigger tips, on average.

3) Why were adjustable-rate mortgage applications where so misleading during the housing bubble? Because lenders showed post-teaser interest rates that equaled the rates were at the date of the loan closing. In an era of cheap money, this disclosure made loans look really cheap.

4) A version of the Google Powermeter for your ...

Let's move

First Lady Michelle Obama is leading the new government initiative "Let's Move" to reduce obesity in kids. Let's Move is a comprehensive effort to combine healthier decision making about food and exercise with environments that help make those decisions easier.

As part of the initiative, a number of nudges will be used, including

1) Consumer friendly labels that take into account the actual sizes Americans now eat and are visible on the front of food packages.

2) Tax incentives to encourage...

If you're selling a house, ask your realtor to list it as a range

Says Psychology Today.

One advantage is obvious: Buyers scanning listings online usually set a minimum and maximum price. These are round numbers (often chosen from a menu on the listing site). In the example above, a buyer whose maximum price was $1 million would see a house listed at "$999,000 to $1,194,876," but not a house listed at a single price higher than a million. (Of course, this depends on listing sites being able to handle price ranges.)

Another advantage of this trick is simple...

Lessons from fan appreciation night

Filed under: Blog posts Tagged: endowment effect

The origins of economics

Richard Thaler, speaking recently at a World Economic Forum panel.

"Let's go back to Adam Smith," Mr. Thaler suggested on a high-profile panel on Rebuilding Economics. "No, actually, let's go back to Adam."

"When it was just the demand for apples, the model still worked pretty well," he said. "But today we have Apple and the iPhone pricing strategy."

"Adam could deal with apples — as long as there were no serpents and women," Mr. Thaler added. "When you add serpents and women, you get...