Economics as a discipline is not infrequently accused of being fairly removed from reality. The activities of societies, countries, corporations and the global macroeconomy itself are meant to fit certain models, at the heart of which are rational agents maximising their utility or welfare. However, economic models are, to varying degrees, abstractions of the real world in which economic agents are all too often not rational. For decades, American economist Richard H. Thaler has studied how decision-making deviates from rational behaviour in the real world and how this can actually be incorporated into economic modelling. His analysis married economics to human psychology and his work has formed the core of the field of behavioural economics. It is for his pioneering contributions to this field that Prof. Thaler was awarded the Economics Nobel on Monday. The Royal Swedish Academy of Sciences cited his analysis of how decision-makers deviate systematically from rational behaviour as conceived in traditional economic theory. Individuals experience bounded rationality due to cognitive limitations. And three, they sometimes lack self-control. These are situations that every individual can relate to. In explaining the relevance of Prof. Thalers work and their decision to award him the prize, the committee highlighted its everyday relevance. Consider, for instance, the existence of social preferences. It would be rational for a shop to increase the price of umbrellas on a rainy day but customers would probably think of this as an unfair or exploitative policy if they were aware of the regular price. Their preference for fairness is thus a factor that keeps the shop from increasing the price of umbrellas according to the weather.