Richard Thaler and Cass Sunstein’s best-seller, ‘Nudge’ is a classic example that many people do not make decisions in the way often characterized in elementary economics textbooks. In fact, people do not necessarily make perfectly rational choices; instead they follow ‘rules of thumb’ to arrive at choices.
We sought the learnings of a few industry officials from the book.
Amit Trivedi of Karmayog Academy believes, “Anybody who wants to understand human behaviour closely, should definitely read this book. The authors have wisely titled the book, ‘Nudge’ as apart from explaining what behavioural biases humans possess, it also offers certain suggestions as to how behaviour can be modified to take a better decision. Ideally, you can’t push somebody to do something but you can certainly nudge people to do certain things. Also, this nudging has to be done carefully and very well.”
He further added, “The book is ideal for financial advisors, because in matters of personal finance one tends to make a lot mistakes because of behavioural biases and psychological issues. Personally, it has improved my interpersonal and negotiation skills. In fact, I have developed better presentation skills with the help of this book.”
P V Subramanyam of Subramoney believes it is one of the most thought-provoking books he has ever read. He said, “I found the book so interesting that I read it in one sitting. The book gives a realistic overview on different human behavioural aspects, which is a ‘must know’ thing for advisors who deal with different individuals on a daily basis.”
Also, it helps advisors to nudge their clients to make good investments. Sharing an illustration from the book, he added, “The author has mentioned when there is a default option for any application or form to filled in, most people tend to go with the default option instead as that seems easier. For instance, if at first you give an option of a healthy lunch to a child and then the junk food, the kid will select the default former option due to human tendency. Also, since the healthy lunch will supplement his hunger he would not eat the junk food.”
