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A choice architect has the responsibility for organizing the context in which people make decisions.
we argue for self-conscious efforts, by institutions in the private sector and also by government, to steer people’s choices in directions that will improve their lives. In our understanding, a policy is ‘paternalistic’ if it tries to influence choices in a way that will make choosers better off, as judged by themselves.
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.
identified three heuristics, or rules of thumb – anchoring, availability, and representativeness
This process is called ‘anchoring and adjustment.’ You start with some anchor, the number you know, and adjust in the direction you think is appropriate. So far, so good. The bias occurs because the adjustments are typically insufficient.
In the language of this book, anchors serve as nudges. We can influence the figure you will choose in a particular situation by ever-so-subtly suggesting a starting point for your thought process.
In many domains, the evidence shows that, within reason, the more you ask for, the more you tend to get.
The third of the original three heuristics bears an unwieldy name: representativeness. Think of it as the similarity heuristic. The idea is that when asked to judge how likely it is that A belongs to category B, people (and especially their Automatic Systems) answer by asking themselves how similar A is to their image or stereotype of B (that is, how ‘representative’ A is of B).
loss aversion operates as a kind of cognitive nudge, pressing us not to make changes, even when changes are very much in our interests.
The combination of loss aversion with mindless choosing implies that if an option is designated as the ‘default,’ it will attract a large market share. 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, be it the employer, government, or TV scheduler.
Because they are busy and have limited attention, they accept questions as posed rather than trying to determine whether their answers would vary under alternative formulations.
Mental accounting is the system (sometimes implicit) that households use to evaluate, regulate, and process their home budget.
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.
Small interventions and even coincidences, at a key stage, can produce large variations in the outcome.
As we have said, obesity is contagious; you’re more likely to be overweight if you have a lot of overweight friends.
Cialdini’s theory predicted that the positive, injunctive norm would be more effective than the negative, informational one. This prediction was confirmed.
If 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.
they felt that they had some ‘room’ to increase consumption, but when the informational message was combined with an emotional nudge, they didn’t adjust their use upward.
offer nudges that are most likely to help and least likely to inflict harm.
Self-control issues are most likely to arise when choices and their consequences are separated in time.
This is a book about libertarian paternalism. At this stage we just want to stress that rare, difficult choices are good candidates for nudges.
we usually get feedback only on the options we select, not the ones we reject.
The discussion thus far suggests that people may most need a good nudge for choices that have delayed effects; those that are difficult, infrequent, and offer poor feedback;
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. One way to do this is to make the information about various options more comprehensible, by transforming numerical information into units that translate more readily into actual use.
iNcentives Understand mappings Defaults Give feedback Expect error Structure complex choices
One study by Drazen Prelec and Duncan Simister (2001) found that people were willing to pay twice as much to bid on tickets to a basketball game if they could pay with their credit card rather than cash.
The second approach is called a cap-and-trade system. In such systems those who pollute are given (or sold) ‘rights’ to pollute in certain amounts (the ‘cap’) and these rights are then traded in a market.
