Behavioral Nudges - Thaler & Sunstein
A summary of “Nudge: The Final Edition” by Richard Thaler and Cass Sunstein, Penguin Books, 2021
Challenges to changing people’s behavior
Present bias: today’s challenges trump tomorrow’s
Salience: We are aware of today’s problems, not tomorrow’s
No clear advantage: Benefits accrue incrementally, not all at once
Probabilistic harms: Tomorrow’s challenges are likely; today’s are certain
Loss aversion: Today’s losses are more easily rationalized than tomorrow’s
Biases & Blunders - How our brain works (most of the time!)
Rules of Thumb: Our brain uses “rules of thumb” to make (sometimes incorrect) estimates:
Anchoring (The first value mentioned “anchors” our brain to that range of values)
Availability (We value something in front of us more than something greater in the future)
Representativeness (If we see lots of something, we automatically assume it must be good)
Optimism & Overconfidence: Our brain has certain egocentric biases:
Most people think they are above average
People have more confidence in their abilities than they should
People underestimate problems or issues in their lives
Gains & Losses: Our brains don’t always work rationally:
Loss aversion: We regret losses about 2x more than we prefer gains
Status quo: People lack attention to make changes to seemingly small behaviors
Framing: How a statement is made can influence an A vs B choice
Planning vs. Doing - What leads us to (in)action!
Self-Control: setting timers can help us complete tasks
Mental Accounting: creating separate accounts for fungible resources (e.g. money) can help us allocate resources rationally
Artificial Constraints: limiting access or time can help us complete tasks
Following the Herd - Why we (sometimes) do the things we do!
Conformity: Doing what others of our tribe do
Cultural Change: Following popular culture, trends and habits
Identity: Doing what people “like you” do in order to keep up with the Joneses
Social Norms as Nudges - Information can change behavior
Informing people what others do under identical circumstances
Making it personal - identify group(s) that the user belongs to
Advertise others doing it - let users know what others are doing
Choice Architectures - Shaping the product or service to elicit a particular behavior
Defaults: Setting the path to least resistance
Provide Feedback: both positive and negative
Mapping: Map choices to outcomes and show these
Sludge vs Nudge - Add ‘sludge’ to prevent negative behaviors
Preventing negative changes by:
Unsubscribes
Rebates
‘Shrouded’ Attributes
How long do Nudges Last? - Keeping people in the ‘zone’
Using smart defaults
Providing constant and variable reminders
Increasing switching costs
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