Podcast
Questions and Answers
[Blank] interventions, such as 'hints' or 'frames,' influence individuals' choices without completely removing any options.
[Blank] interventions, such as 'hints' or 'frames,' influence individuals' choices without completely removing any options.
soft
An intervention qualifies as a mere ______ if it is both easy and inexpensive to avoid, ensuring minimal restriction on individual choice.
An intervention qualifies as a mere ______ if it is both easy and inexpensive to avoid, ensuring minimal restriction on individual choice.
nudge
[Blank] involves measures that aim to reduce people's choices, such as the prohibition of certain substances, reflecting a protectiv approach.
[Blank] involves measures that aim to reduce people's choices, such as the prohibition of certain substances, reflecting a protectiv approach.
paternalism
[Blank] paternalism steers decisions while still allowing individuals to choose, using methods like providing information or influencing placement.
[Blank] paternalism steers decisions while still allowing individuals to choose, using methods like providing information or influencing placement.
A choice ______ is someone who organizes the environment in which people make decisions, influencing their choices through design.
A choice ______ is someone who organizes the environment in which people make decisions, influencing their choices through design.
Unlike 'Econs', who are ideally rational, ______ sometimes make mistakes that lead to predictable errors.
Unlike 'Econs', who are ideally rational, ______ sometimes make mistakes that lead to predictable errors.
One example of 'Status quo' relates to subscriptions, mobile phones and software installations, which all represent ______ options.
One example of 'Status quo' relates to subscriptions, mobile phones and software installations, which all represent ______ options.
Nudges are more effective when there are information ______, prompting individuals to improve their decision making.
Nudges are more effective when there are information ______, prompting individuals to improve their decision making.
Nudges are also effective when there is information ______, prompting individuals to pay attention to what's important and filter out irrelevant aspects.
Nudges are also effective when there is information ______, prompting individuals to pay attention to what's important and filter out irrelevant aspects.
Nudges address situations with missing ______, such as long-term decisions, to guide people in the right direction and ensure better outcomes.
Nudges address situations with missing ______, such as long-term decisions, to guide people in the right direction and ensure better outcomes.
[Blank] translates to once one has reached the main objective, one forgets about the previous steps.
[Blank] translates to once one has reached the main objective, one forgets about the previous steps.
[Blank] are needed for tough and uncommon decisions, especially when there's a lack of immediate feedback.
[Blank] are needed for tough and uncommon decisions, especially when there's a lack of immediate feedback.
A critique of nudges and norms is the border between nudging and ______.
A critique of nudges and norms is the border between nudging and ______.
Under an opt-______ system for organ donation, people are considered donors unless they actively object to it, promoting higher donation rates.
Under an opt-______ system for organ donation, people are considered donors unless they actively object to it, promoting higher donation rates.
Under an opt-______ system for organ donation, people must actively register or give their consent in writing.
Under an opt-______ system for organ donation, people must actively register or give their consent in writing.
The implementation of organ donation requires donors to register or give their consent in writing following an opt-______ system.
The implementation of organ donation requires donors to register or give their consent in writing following an opt-______ system.
The implementation of organ donation considers every adult as a donor, needing to object any of the following, following an opt-______ system.
The implementation of organ donation considers every adult as a donor, needing to object any of the following, following an opt-______ system.
When people make mistakes, a 'forcing ______' can be a useful solution preventing future mistakes/ errors.
When people make mistakes, a 'forcing ______' can be a useful solution preventing future mistakes/ errors.
A 'Status ______' is when if one does not become active, nothing changes.
A 'Status ______' is when if one does not become active, nothing changes.
A 'back to ______' is when, if one does not become active, things will change.
A 'back to ______' is when, if one does not become active, things will change.
[Blank] are the homo oeconomicus: ideal, but unrealistic.
[Blank] are the homo oeconomicus: ideal, but unrealistic.
Nudges consider differences during time ______, as well as complexity that involves deficits in information.
Nudges consider differences during time ______, as well as complexity that involves deficits in information.
Flashcards
Nudge
Nudge
Soft interventions, including hints and frames, that affect individuals' choices without eliminating any options.
Paternalism
Paternalism
The practice of influencing people's choices in a way that protects them, potentially limiting their freedom of choice, like a prohibition.
Hard Paternalism
Hard Paternalism
Reducing options to choose from, such as taxation and prohibitions.
Libertarian Paternalism (Nudges)
Libertarian Paternalism (Nudges)
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Choice Architect
Choice Architect
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Econs
Econs
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Humans
Humans
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Status Quo
Status Quo
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Back to Zero
Back to Zero
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Post-completion Error
Post-completion Error
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Forcing Function
Forcing Function
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Opt-in (Informed consent rule)
Opt-in (Informed consent rule)
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Opt-out (Presumed consent rule)
Opt-out (Presumed consent rule)
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Study Notes
- Nudge and Behavioral Economics were presented in a lecture on 26 November 2024
- Relevant publications include "Nudges. Improving Decisions about Health, Wealth and Happiness" (2008); "Helping Consumers Know Themselves," American Economic Review: Papers & Proceedings (2011); and "From Homo Economicus to Homo Sapiens," Journal of Economics Perspectives (2000)
What are Nudges?
- Nudges are defined as soft interventions, such as "hints" or "frames" that influence individual choices without eliminating any options
- They alter behavior in a predictable way without forbidding choices or significantly changing economic incentives
- To qualify as a nudge, the intervention must be easy and cheap to avoid
Paternalism
- Paternalism involves patronizing or protective measures reducing an individual's choices, such as the prohibition of marijuana
- Hard paternalism reduces choice options; for example, cigarette taxation or prohibitions
- Libertarian paternalism (nudges) involves "steering" decisions while preserving choices; for example, cigarette information, placement, and pictures
Choice Architecture
- A choice architect is someone responsible for organizing the context in which people make decisions
- There is no such thing as "neutral" design
Choice Architecture Example
- An example of a nudge is placing a fly or goal in a urinal
- This has been shown to increase aiming accuracy by about 80%
"Econs" vs. Humans
- Econs (homo oeconomicus) are "ideal" but unrealistic beings
- They exhibit no perfect foresight
- They exhibit no systematic errors or mistakes
- They demonstrate rational behavior of utility maximizing
- They have unbiased behavior and perceptions of reality
- Humans (homo sapiens) make mistakes but are realistic
- Mistakes lead to predictable errors
- Biased behavior includes status quo bias, planning fallacy, and overoptimism
- Humans have biased perceptions of reality
- Behavior can be positively influenced
Choice Architecture with Default Options
- Status quo choice architecture means if the user does not become active, nothing changes
- Examples include subscriptions, mobile phones, and software installations with checked boxes
- Conversely, with the "back to zero" approach, things change if the user does not become active, like screen savers or security measures
When Nudges Make Sense
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Differences in time horizons, such as cost versus benefit, pleasure goods, and investment goods
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Complexity, including information deficits and information overflow
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Frequency factors in experience and the number of similar choices
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Missing feedback such as with long-term decisions
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Inattention, such as remembering the urinal example
Mistakes
- A post-completion error is when one forgets about the previous steps once the main objective has been reached
- This could be seen at ATMs, gas tanks, and when using a copy machine
- A forcing function as a solution appears in ATMs, email attachments, and at gasoline stations
When We Need Nudges
- Nudges are required for difficult and rare decisions lacking prompt feedback, when translating aspects of the situation into easily understandable terms is difficult
Critique of Nudges
- It can be difficult to ascertain the border between nudging and paternalism
- Relying on nudges may result in fewer people learning from mistakes
- The "choice architect" has limited knowledge himself
- There is potential for abuse of nudges
Organ Donation
- Opt-in systems for organ donation use an informed consent rule
- Donors must register or give their consent in writing (e.g., organ donor card)
- Opt-out systems use presumed consent rule
- Every adult is considered an organ donor unless they object
Further Literature
- Relevant literature includes Schnellenbach, J. (2012), "Nudges and Norms: The Political Economy of Soft Paternalism," European Journal of Political Economy
- Additional sources include two YouTube videos with specific URLs
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