Mr Thaler, an American born in New Jersey in 1945, spent most of his early career at Cornell University before moving to the University of Chicago in 1995.
Unusually for an economist, he is known for the clarity of his ideas and the quality of his writing.
“Nudge”, a book co-written with Cass Sunstein, is both an extraordinarily influential work and a bestseller.
Its lessons have been adopted by governments across the world; “nudge units” in America and Britain studied how to boost saving and taxpaying, encourage healthy behaviour and reduce energy use.
“Nudge” drew on years of work by Mr Thaler and co-authors identifying oddities in human behaviour.
Setting out to explore why people feel losses more keenly than gains, he helped uncover the endowment effect: a tendency to value something more highly just because you own it.
To detect it, he distributed coffee mugs at random to half of a group of test subjects, who were then invited to sell the mug, if they wished, to the other, mugless half.
Theory would predict that those with and without mugs should value them the same, on average, and so about half of the mugs should change hands.
In fact, those with mugs valued them more than those without.
Offers to buy the mugs by the have-nots were usually too low to convince the haves to sell, and relatively few transactions took place.
This finding, since replicated many times, suggested that the context of an economic choice matters.
That, in turn, means that the way choices are framed, by firms or governments, can influence how people respond.