Nudges In Decision Making Flashcards
Behavioral nudges
Small changes to the choice environment that are designed to influence decisions in a predictable way
Behavioral nudges do not
Forbid any options
Behavioral nudges are not
Compulsory or expensive
Examples of behavioral nudges
Plastic bag charge, sweets at the checkout
How do nudges influence behavior in a predictable way?
Heuristics and biases are exploited to alter decisions
Nudges cannot counteract
Strong preferences
Simple heuristics
Mental shortcuts for solving problems
Heuristics work well most of the time but can lead to
Unwanted biases
Unwanted biases
Deviations from optimal choice
Our ____ also makes shortcuts
Vision
Because the brain doesn’t process every photon of incoming light, we use
Shortcuts
We use context when
Making decisions
Examples of heuristics
Representativeness, availability, anchoring and adjustment, framing and loss aversion
Anchoring and adjustment
Anchor on information that comes to mind and adjust until a plausible estimate is reached
Self generated (internal) anchors
When our frame of reference of our estimation is based on our own experience
Only —— anchors are bad
Uninformative
Framing
Our decisions are always made in context, different ways of framing the same question can change the answer
Loss aversion framing example
Losses loom larger than gains
Fat free vs fat full framing example
91% fat free sounds healthier than 9% fat
Endowment effect
We value something more than we have it in comparison to acquiring it
Endowment effect examples
Participants who were given mugs wanted more money to sell them than participants who were initially offered mugs to purchase
Examples of nudging
Defaults, social nudging, structural changes, labeling, framing
Defaults
When an option is pre selected for us
Social nudging
Elicit social comparisons with others
Structural changes
Portion sizes, location of items, menu order
Labeling
Highlighting specific info, like calorie count
Pitfalls of defaults
Choosing the correct default can be very difficult
With social nudges people overestimate ____ and underestimate _____
Rate of undesirable behavior, rate of desirable behavior
Boomerang effect
Participants were told if their energy use was above or below average, and those who were below the average used more energy afterwards
The boomerang effect shows that it is
Important to highlight the social importance of desired behavior
Backfire
Nudges can have the opposite effect
Offset
Nudge initially works, but rebound and spillover effects on other behavior eliminates benefit
Richard Thaler asked us to
Nudge for good
In practice nudges are often used for
“Evil”
Dark nudges are also called
Sludges
Sludges benefit the
Nudger
Example of sludges
Sign up online but cancel over the phone, pre selected defaults and anchors, default Netflix plan is the most expensive
Some cookies online aren’t good because of the way in which they
Use your data
The cash machine nudges you by
Setting up only two initial options
Tipping has a nudge in creating a
Default tip
Computers are trying to nudge us
By suggesting we back things up with a Dropbox
Nudges are a form of soft paternalism/
Government meddling
Do nudges preserve freedom?
That is, can we ignore a judge if we disagree with it?
Nudges are not always
Noticed
Nudges are unavoidable, Asher & McKenzie (2006)
Subjects were asked to pour water from one cup to the other and set a half full cup at the edge of the desk
In the Sher & McKenzie experiment,
69% of subjects furnished the initially cup when a half empty was requested, whereas only 46% of subjects furnished the initially full cup when a half full cup was requested
