Nudge: The Final Edition

by Richard H. Thaler

In the language of this book, anchors serve as nudges. One example comes from tipping behavior in taxicabs. Taxi drivers were initially reluctant to adopt the technology to accept credit cards in their cabs, because the credit card companies take a cut of roughly 3 percent. But those who did install the technology were pleasantly surprised to learn that their tips increased! This was partly due to some anchoring. When customers elected to use their card to pay, they would often be confronted with tip options that looked something like this: 15% 20% 25% Choose your own amount. Notice this screen is nudging people toward higher tips by offering precalculated amounts that start at these percentages. (And when in doubt, people often choose the middle option—in this case 20 percent, which is higher than the 15 percent many customers previously chose without this intervention.) Also, the option to choose your own tip is a bit of an illusion. The screen appears only when the trip is over; the customer is ready to leave, others may be waiting to get into the cab, and entering one’s own