Carlos Barria/Reuters People tend to make irrational decisions with money. Behavioral economist Richard Thaler, who won the 2017 Nobel Prize in Economic Sciences, studied and identified why people make illogical financial decisions. He found that there are a few mental biases — such as the endowment effect, mental accounting, overconfidence, and status quo bias — that determine how people spend. Traditional models of economic behavior assume that people will make logical money decisions to achieve the best outcome. But in many real-life situations, people tend to make irrational decisions with money.