UR Assistant Professor of Economics Asen Kochov described Thaler's foundational work in behavioral economics as "one of the main developments in economics in the last 50 years".
Thaler's award-winning theory in behavioural science propounds on the idea that subtle "nudges" can guide human behaviour towards developing habits that are beneficial in the long run, without forcing them to comply.
In a statement, the Royal Swedish Academy of Sciences had said that Richard H. Thaler has incorporated psychologically realistic assumptions into analyses of economic decision-making.
Thaler said he will likely use the prize money of 9-million-kronor ($1.1-million) in irrational ways. In fact, he co-authored a book, Nudge, Improving Decisions About Health, Wealth and Happiness, which became a best-seller.
"There's also a nudging unit for the United Kingdom government, there's one for the Australian government, it even affects the Swedish government when they think about these things"'. Of 79 laureates so far, more than a third have been affiliated with the university's school of economics.
Kochov said Thaler showed consumers can be guided to more rational choices through nudges, such as making a retirement savings the default plan at work, rather than leaving it up to the employee to initiate.
Thaler told the Nobel committee by videoconference he was "pleased" by the award.
The economics prize, officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was established in 1968.
A University of Rochester graduate and former faculty member is the latest recipient of the Nobel Prize for economics.