Report on Behavioral Economics. Topic: a Concept of nudge

According to rational choice theory developed in the past century agents make their choice accordingly with common sense, carefully considering factors such as prices, taxes. Fines and etc. to get the highest possible benefit and they are exclusively motivated by their material self-interest. The problem is that in theory it works well, but in reality it is not. Dictator game and ultimatum game can be an excellent example of the failure of the rational choice theory: Let’s imagine that a subject (proposer) were given a fixed sum of money. He can leave an entire amount to himself or give a part of it to a stranger(responder), who can either accept or refuse the amount proposed1. In the case of refusal both subjects get zero. Fixed amount is known for both players. Rational choice theory predicts that a stranger should accept any amount because he cares only about monetary reward. However in reality people often want to give more than it is expected of them and often refuse to take the sum size of which appears to them unfair. Such people are willing to punish others at a considerable price for themselves. The reason is that human beings are guided not only by cold mind but also by social norms, emotions, fairness and reciprocity. One of the most important discoveries was the presence of two systems of human thought. The first – intuition- is fast, automatic, governed by habits, effortless and involves emotions. The second – reasoning – is slow, serial, effortful and deliberately controlled. The fastest part of our mind doesn’t stop to ponder, it operates immediately, instantly drawing conclusions. The slow one,
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on the contrary, is used to perform complex tasks that require attention and logic. The second system usually allow us to make wiser decisions. However, attention, concentration and ability to