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A nudge, as we will use the term, is any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting the fruit at eye level counts as a nudge. Banning junk food does not.
Republicans want to make people’s lives better; they are simply skeptical, and legitimately so, about eliminating people’s options.
governments are likely to allocate their resources in a way that fits with people’s fears rather than in response to the most likely danger.
judgments can be nudged back in the direction of true probabilities.
Unrealistic optimism is a pervasive feature of human life; it characterizes most people in most social categories. When
loss aversion operates as a kind of cognitive nudge, pressing us not to make changes, even when changes are very much in our interests.
Default options thus act as powerful nudges. In many contexts defaults have some extra nudging power because consumers may feel, rightly or wrongly, that default options come with an implicit endorsement from the default setter,
people tend to be somewhat mindless, passive decision makers.
busy people trying to cope in a complex world in which they cannot afford to think deeply about every choice they have to make.
spoke confidently and firmly, his judgment had a strong influence on the group’s assessment.
“collective conservatism”: the tendency of groups to stick to established patterns even as new needs arise.
Small interventions and even coincidences, at a key stage, can produce large variations in the outcome. Today’s hot singer is probably indistinguishable from dozens and even hundreds of equally talented performers whose names you’ve never heard. We can go further. Most of today’s governors are
On average, those who eat with one other person eat about 35 percent more than they do when they are alone; members of a group of four eat about 75 percent more; those in groups of seven or more eat 96 percent more.*
you want to nudge people into socially desirable behavior, do not, by any means, let them know that their current actions are better than the social norm.
Generally, the higher the stakes, the less often we are able to practice.
RECAP: Record, Evaluate, and Compare Alternative Prices.
United Kingdom, where some defined-benefit plans do not require any employee contributions and are fully paid for by the employer. They do require employees to take action to join the plan. Data on twenty-five such plans reveal that scarcely half of the eligible employees (51 percent) signed up!4 This is equivalent to not bothering to cash your paycheck.
In retirement accounts, most investors do not choose stocks individually but rather invest via mutual funds.
twenty years (the relevant horizon for many investors), they choose to invest nearly all of their money in stocks.
According to estimates by the economist Lisa Meulbroek (2002), a dollar in company stock is worth less than half the value of a dollar in a mutual fund! In other words, when firms foist company stock onto their employees, it is like paying them fifty cents on the dollar.
if you have more than 10 percent of your retirement money invested in the company you work for, diversify as quickly as possible.)
model portfolios that have varying degrees of risk. We have noted that some plan sponsors offer conservative, moderate, and aggressive “lifestyle” portfolios.
offer plan participants “target maturity funds.” Target maturity funds typically have a year in their name, like 2010, 2030, or 2040.
sensible investors should value—such as fees, risk, and performance.
folly of extrapolating recent returns into the future.
those with a real need for emissions licenses would pay people, perhaps especially in poor nations, who would prefer to have the money.
Many people are in relationships that are intimate, committed, and monogamous—but without the benefit of marriage. Many people are in marriages that are neither intimate nor monogamous. Countless variations exist. Why not leave people’s relationships to their own choices, subject to the judgments of private organizations, religious and otherwise?
Choice architecture, both good and bad, is pervasive and unavoidable, and it greatly affects our decisions.
