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‘pluralistic ignorance’ – that is, ignorance, on the part of all or most, about what other people think.
The moral is that people are paying less attention to you than you believe. If you have a stain on your shirt, don’t worry, they probably won’t notice. But in part because people do think that everyone has their eyes fixed on them, they conform to what they think people expect.
An especially good way to gain weight is to have dinner with other people.11 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.
We think of ourselves as autonomous individuals, each driven by our internal abilities and desires and therefore solely responsible for our own behavior, particularly when it comes to voting.
If choice architects want to shift behavior and to do so with a nudge, they might simply inform people about what other people are doing.
they become less likely to cheat. It follows that either desirable or undesirable behavior can be increased, at least to some extent, by drawing public attention to what others are doing.
The nudge provided by asking people what they intend to do can be accentuated by asking them when and how they plan to do it.
This insight falls into the category of what the great psychologist Kurt Lewin called ‘channel factors,’ a term he used for small influences that could either facilitate or inhibit certain behaviors.
slightly longer answer is that people will need nudges for decisions that are difficult and rare, for which they do not get prompt feedback, and when they have trouble translating aspects of the situation into terms that they can easily understand.
rare, difficult choices are good candidates for nudges.
When people have a hard time predicting how their choices will end up affecting their lives, they have less to gain by numerous options and perhaps even by choosing for themselves. A nudge might be welcomed.
stimulus response compatibility. The idea is that you want the signal you receive (the stimulus) to be consistent with the desired action. When there are inconsistencies, performance suffers and people blunder.
Automatic Systems always win over Reflective ones.
If you indirectly influence the choices other people make, you are a choice architect.
And since the choices you are influencing are going to be made by Humans, you will want your architecture to reflect a good understanding of how humans behave. In particular, you will want to ensure that the Automatic System doesn’t get all confused.
Defaults are ubiquitous and powerful.
the concept of mapping. A good system of choice architecture helps people to improve their ability to map and hence to select options that will make them better off.
it might be useful to offer a mnemonic device to help recall the six principles. By rearranging the order, and using one small fudge, the following emerges. iNcentives Understand mappings Defaults Give feedback Expect error Structure complex choices Voilà: NUDGES. With an eye on these NUDGES, choice architects can improve the outcomes for their Human users.
A major goal of the next four chapters is to explore how people can do a better job at the difficult tasks of saving, investing, and borrowing.
First, it assumes that people are capable of solving a complicated mathematical problem in order to figure out how much to save.
The second problem with the theory is that it assumes that people have enough willpower to implement the relevant plan.
We interpret the statement ‘I should be saving (or dieting, or exercising) more’ to imply that people would be open to strategies that would help them achieve these goals. In other words, they are open to a nudge.
People really do want to join the plan, and if you dig a channel for them to slide down that removes the seemingly tiny barriers that are getting in their way, the results can be quite dramatic.
participation rates jump when enrollment is easy.
The most effective way to increase enrollment in a Save More Tomorrow plan is to combine it with automatic enrollment.
Although solving the problem of how much to save is hard, choosing the right portfolio is even harder.
the difference in the returns between Treasury bills and equities is called the ‘equity premium.’ This premium is considered to be compensation for the greater risk associated with investing in stocks.
Humans are loss averse. Roughly speaking, they hate losses about twice as much as they like gains.
Most people need some help; good choice architecture and carefully selected nudges can go a long way.
When markets get more complicated, unsophisticated and uneducated shoppers will be especially disadvantaged by the complexity.
Credit cards inhibit self-control
maximizing choice may not lead to the best possible outcome.
the well-known tendency of investors to buy stocks from their home country, something that economists refer to as the home bias.2 Of course you might think that investing at home makes sense: buy what you know! But when it comes to investing, buying what you think you know does not necessarily make sense.
, individual investors tend to be trend followers, rather than good forecasters, in their asset-allocation decisions.
if the underlying decision is difficult and unfamiliar, and if people do not get prompt feedback when they err, then it’s legitimate, even good, to nudge a bit.
The more choices you give people, the more help with decision making you need to provide.
It is usually good to provide people with lots of options, but when the question is complicated, sensible choice architecture guides people in the right directions.
One interpretation, favored by defenders of the plan, and the one that would be correct if we were studying a population of Econs, is that all is going well – the wide variety of plans is handling diverse health conditions, and seniors have chosen the best plan for their needs. The second interpretation, more plausible if the participants are Humans, is that inertia and the status quo bias are keeping people from switching.
The more choices there are, and the more complex the situation, the more important it is to have enlightened choice architecture.
Recall that people like to do what most people think it is right to do; recall too that people like to do what most people actually do.
Regulators have often chosen some kind of command-and-control regulation, by which they reject free choices and markets entirely and allow people little flexibility in promoting environmental goals.
Markets are a big part of this system, and for all their virtues, they face two problems that contribute to environmental problems. First, incentives are not properly aligned. If you engage in environmentally costly behavior next year, through your consumption choices, you will probably pay nothing for the environmental harms that you inflict. This is what is often called a ‘tragedy of the commons.’
The second problem that contributes to excessive pollution is that people do not get feedback on the environmental consequences of their actions.
Just as no building lacks an architecture, so no choice lacks a context. Choice architects, whether private or public, must do something.
forcing people to choose is not always wise, and remaining neutral is not always possible.
Our basic conclusion is that the evaluation of nudges depends on their effects – on whether they hurt people or help them.
people are most likely to need nudges for decisions that are difficult, complex, and infrequent, and when they have poor feedback and few opportunities for learning.
when choices are fraught, when Nudgers have expertise, and when differences in individual preferences are either not important or can be easily estimated, then the potential for helpful nudging is high.
A good approach to thinking about these problems has been proposed by a collection of behavioral economists and lawyers under the rubric of ‘asymmetric paternalism.’5 Their guiding principle is that we should design policies that help the least sophisticated people in society while imposing the smallest possible costs on the most sophisticated.
In this book we have made two major claims. The first is that seemingly small features of social situations can have massive effects on people’s behavior; nudges are everywhere, even if we do not see them. Choice architecture, both good and bad, is pervasive and unavoidable, and it greatly affects our decisions. The second claim is that libertarian paternalism is not an oxymoron. Choice architects can preserve freedom of choice while also nudging people in directions that will improve their lives.
