This year’s Nobel Prize in economics went to Professor Richard Thaler who described financial behavior as largely a problem of self-control where people don’t act rationally as assumed in economic models but act on their own best intentions. This finding explains irrational events we see in the markets or explains the tail risk we see from overreactions and contrasts with a very important theory in economics known as efficient market hypothesis where markets absorb information and act rationally. One can assume in today’s world of the "information age" and busy schedules that this concept is more pervasive than in the past. It is recognition of these behaviors that led Thaler to recommend automatic enrollment in 401(k) plans. And, is certainly a sound reason for those with wealth to utilize a good professional adviser.
These are WSJ articles. Often the WSJ does not allow direct links to their articles or limits access over time. However, if you search (i.e.: google it) the title "Richard Thaler: A Nobel Prize for Human Nauter" and "Why Richard Thaler Matters to Investors" you can find and access the article instead of through our website.