This report argues that development policies based on new insights into how people actually think and make decisions will help governments and civil society more readily tackle such challenges as increasing productivity, breaking the cycle of poverty from one generation to the next, and acting on climate change.Drawing from a wealth of research that suggests ways of diagnosing and solving the psychological and social constraints to development, the World Development Report identifies new policy tools that complement standard economic instruments.To inspire a fresh look at how development work is done, this report outlines three principles of human decision making: thinking automatically, thinking socially, and thinking with mental models. Much of human thinking is automatic and depends on whatever comes to mind most effortlessly. People are deeply social and are influenced by social networks and norms. Finally, most people do not invent new concepts; rather they use mental models drawn from their societies and shared histories to interpret their experiences.Because the factors affecting decisions are local and contextual, it is hard to predict in advance which aspects of program design and implementation will drive the choices people will make. Interventions therefore need to take account of the insights found in this report and be designed through a `learning by doing' approach.This report applies the three principles to multiple areas, including early childhood development, productivity, household finance, health and health care, climate change and more.