Nudge and Sludge: The Vocabulary of Everyday Money Decisions

In this episode of Money Lessons, Andy supplies the vocabulary behind three weeks of teaching on habits, defaults, and friction.

Herbert Simon — who was never an economist — challenged his era's assumption that buyers decide with complete information, and won a Nobel Prize for finding those limits inside companies before anyone thought to look for them in customers.

Richard Thaler named the arrangement of options in front of you choice architecture, and a decade after publishing Nudge with Cass Sunstein, he coined sludge for friction pointed at the person who has to get through it.