Nudge

Question 1

Describe the choice heuristic Anchoring, and in what way it can bias a decision.

Answer 1

Anchoring is when you answer an unknown based on a known starting point. For example, reasoning about the population size of Örebro by adjusting the known population size of Stockholm downwards.

Anchoring causes biased decisions since the adjustment from the anchor is often insufficient.

Question 2

Describe the Availability choice heuristic.

Answer 2

We judge how likely an event is by how readily examples come to mind. You likely overestimate the probability of events that you have experienced yourself, or that you can imagine vividly.

Question 3

What is the status quo bias?

Answer 3

The bias to stick with ones current situation. It makes you avert to changes.

For example:

• Watching whatever show comes on next on TV
• Not canceling a subscription

Question 4

What does R.Thaler and C. Sunstein mean by the term “Choice Architecture“?

Answer 4

Choice Architecture refers to how almost any detail about how a choice is presented will influence decisions.

Any choice will necessarily have a choice architecture, deliberately engineered or haphazard.

Question 5

Describe the two basic categories of social influence.

Answer 5

• We gather information from others.
• Peer pressure.

See Nudge, page 54

Question 6

Suggest a nudge to increase recycling in a community where most people are already good at recycling.

Answer 6

Point out that most people are recycling! This will nudge other people towards conforming with the group.

Question 7

What are the six principles of good choice architecture suggested by R. Thaler and C. Sunstein?

Answer 7

• Incentives
• Understand mappings (from choice to welfare)
• Defaults
• Give feedback
• Expect errors
• Structure complex choices