Thaler, who is professor of behavioural science and economics at Chicago Booth University, won the prize, which included nine million Swedish Krona (£843,000), for his contribution to behavioural economics.
Nudge, the bestseller he co-wrote with Harvard professor Cass Sunstein, was published in 2008 and explores the reasons behind why we make unreasonable or irrational decisions.
In an interview with Nobelprize.org, Thaler described a nudge as, “some feature of the environment that changes the behaviour of humans but would not change the behaviour of rational economic agents”.
He said his favourite was a nudge affecting people’s enrolment in the pension plan where “the default is to join rather than not to join”.
Similarly, in his other academic works Thaler has shown how human traits affect individual decisions and market outcomes.
This is not the first time that behavioural economics has been in the limelight, as Daniel Kahneman won the Nobel Prize in economics in 2002 for his “psychological research into economic science”.