Behavioral Insights Lecture 2024 PDF

IT and Society Lecture 8: Behavioral Insights and Societal Scale Mechanisms Dr. Mo Chen Prof. Jens Grossklags, Ph.D. Professorship of Cyber Trust Department of Computer Science School of Computation, Information and Technology Technical University of Munich June 10, 2024 Learning Objectives Y...

IT and Society Lecture 8: Behavioral Insights and Societal Scale Mechanisms Dr. Mo Chen Prof. Jens Grossklags, Ph.D. Professorship of Cyber Trust Department of Computer Science School of Computation, Information and Technology Technical University of Munich June 10, 2024 Learning Objectives You understand the concept of behavioral insights and why it matters. You know different types of nudges implemented in both business and public policy sectors. You are aware of ethical concerns raised by nudging. You understand how the SCS works to change people’s behavior and the concerns it raises as a tool of social governance. 2 Behavioral Change ‒ 3 Es Enforcement: Laws, Regulations (strict penalties for violations) E.g., seatbelt, speeding, smoking in enclosed public areas Education: E.g., educational campaigns, training Engineering: Applying scientific principles to design, build, and improve systems E.g., designing bridges and buildings, airport smoking lounges What are some other methods for influencing behavior change? Nudging The SCS  4 https://www.youtube.com/watch?v=SByymar3bds Behavioral Insights Behavioral insights help us to understand how people actually make decisions in everyday life. 5 What is your choice between different sizes? 6 What is your choice between different sizes? The compromise effect: Individuals are more likely to choose a middle option when presented with three choices. The decoy effect: The introduction of a third option could even switch an individual’s preference between the first two items 7 Behavioral Insights Behavioral science is a roadmap to changing behavior. 8 Behavioral Insights Subtle changes to the way decisions are framed can have a big impact on how people respond to them. 9 Behavioral Insights An inductive approach to policy making that combines insights from psychology, cognitive science, and social science with empirically- tested results to discover how humans actually make choices. —— A definition by the OECD 10 Nudge Theory 11 Nudge Theory Richard Thaler The father of “Nudge Theory” Nobel economics prize winner in 2017 for his contributions to behavioral economics Photo source: https://www.rolandberger.com/en/Point-of-View/Nobel-Prize-winner-Richard-Thaler.html 12 Nudge Theory ‒ Definition (1) 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. —— Thaler and Sunstein (2008) 13 Nudge Theory ‒ Definition (2) Nudges are ways of influencing choice without limiting the choice set or making alternatives appreciably more costly in terms of time, trouble, social sanctions and so forth. They are called for because of flaws in individual decision-making, and they work by making use of those flaws. —— Hausman and Welch (2010) 14 Nudge Theory To encourage people to make decisions that are in their broad self-interest through a relatively subtle policy shift. It is not about penalizing people financially if they don’t act in a certain way. It is about making it easier for them to make a certain decision. Nudges are specifically designed to preserve full freedom of choice. Don’t push. Don’t pull. ‘Nudge’. 15 Nudge in Public Policy 16 17 Types of Nudges Default Option Social Norms Reminder Providing Feedback The Element of Entertainment Disclosure 18 Default Option A default option is simply what happens if you do nothing. An individual is nudged to choose a given option if it is set as default. 19 Example I: Organ Donation Opt in Opt out Johnson and Goldstein (2003). “Do Defaults Save Lives?”. Science. Vol. 302 20 Example II: Square Payments Austin Carr (2013). “How Square Register’s UI Guilts You Into Leaving Tips”. Available at https:// www.fastcompany.com/3022182/how-square-registers-ui-guilts-you-into-leaving-tips 21 Social Norms Injunctive Norms: Behavior other individuals approve of (e.g., 80% of individuals think activity x is morally good) Descriptive Norms: The desirable behavior of others (e.g., 80% of individuals engage in desirable activity x) Such information is often most powerful when it is as local and specific as possible. (e.g., “the overwhelming majority of people in your community do x”) 22 Example: Tax Compliance in UK Social Norm Letter: 19% “96% of Medway Council Tax is paid on time. You are currently in the very small minority of people who have not paid us yet.” 13% Diagram Letter: A flow diagram summarizing the collection process. 23 Reminder For example, by email or text message, to serve as a reminder for overdue bills and coming obligations or appointments. Covid Vaccine Reminder 24 Example: Password Settings 25 Providing Feedback Feedback makes people aware of their behavior and pushes them into the desired direction. Receiving positive feedback gives a good feeling and serves as a reinforcer. 26 Example I: Speeding Measures 27 Example II: E-health (FitBit) 28 The Element of Entertainment/Gamification Humans have a need to integrate play elements into their lives. To nudge is to stimulate the desired behavior in an entertaining way. 29 Example: Piano Stairs 30 Disclosure In some settings, disclosure can operate as a check on private or public inattention, negligence, incompetence, wrongdoing, and corruption. Smart Meters (Eco) 31 Data-driven Nudges Nudging based on big datasets containing citizens’ behavioral insights enabling more accurate and systematic behavior change (Ranchordás, 2019) The algorithmic real-time personalization and reconfiguration of choice architectures based on large aggregates of data (Yeung, 2016; Lanzing, 2018) 32 Data-driven Nudges Avoiding the over- and under-inclusiveness of static forms of design-based regulation Automatic enforcement to take place dynamically With networked, data-driven digital-guidance technologies, operating as self-contained cybernetic systems 33 Data-driven Nudging in Different Sectors For Corporations: Nudge citizens to buy certain products or to walk through specific aisles of stores For Governments: Complex networks of millions of smart devices in constant communication will give policymakers access to solid information on citizens’ preferences and likely actions with a greater degree of precision than any behavioral experiment would 34 Data-driven Nudges Netflix Recommendations Instagram Feeds Amazon's Personalized Shopping Experience 35 Facebook Blood Donation https://www.lifeblood.com.au/news-and-stories/media-centre/media-releases/facebook-tool 36 Policy Conflict Manipulation Privacy Equity Autonomy Responsible and transparent use of nudging interventions 37 Thought Experiment What could the extreme situation look like when big data and behavioral insights are used to their fullest potential? Imagine a world where every action you take, both online and offline, is tracked and analyzed to optimize your behavior and decisions. How might it change the way we live, work, and interact with each other? 38 https://www.youtube.com/watch?v=QDVVo14A_fo&t=1s 39 Google’s Selfish Ledger The way we use our phones creates a constantly evolving representation of who we are. Ledger: These data profiles could be built up, used to modify behaviors, and transferred from one user to another. Ledger of our device use ‒ the data on our actions, decisions, preferences, movements, and relationships ‒ could be passed on to other users much as genetic information is passed on across generations. https://www.youtube.com/watch?v=QDVVo14A_fo&t=1s 40 Google’s Selfish Ledger Self-improvement: A future of total data collection, where Google helps nudge users into alignment with their goals A species-level understanding of complex issues: The system would be able to plug gaps in its knowledge and refine its model of human behavior — not just your particular behavior or mine, but that of the entire human species. 41 The Chinese Social Credit System 42  Kostka, G. (2019). China’s social credit systems and public opinion: Explaining high levels of approval. New Media & Society, 21(7), 1565‒1593. High approval level for the system Citizen voice little doubt about political legitimacy of the government ensuring social order through surveillance and National metric system assigning monitoring systems social credit scores to individuals 43 The Chinese Social Credit System A multi-level socio-technical system The Government Branch The Commercial Branch The National Level The Consumer Credit Reporting System The Corporate Credit The Local Level Reporting System 44 Two Critical Mechanisms Stated goal: To assess, educate, and to change the social and economic behavior using digital tools and big data technologies Two branches of the SCS − Commercial branch − Government-run SCS ØImplemented at different levels: national level & local level (provincial level, city level): targeting both organizations and individuals ØDigital blacklisting and redlisting mechanism à Reputational gain and loss ØJoint punishment and reward mechanism à Material gain and loss 45 Blacklist & Redlist “Good” behavior “Bad” behavior Reputational gain (Redlist) Reputational loss (Blacklist) material incentives/punishments e.g., High-speed trains, premium insurances, private schools (among others) 46 An Online Blacklist 47 An Online Redlist Entry Full name Function to dispute Full name ID Number Taxi Star No explanation given 48 1 2 3 Different types of blacklists across China 1. “Lao Lai” blacklist 2. Employment relationship blacklists 3. Coronavirus blacklists 49 1 2 3 Different types of redlists across China 1. Redlists of trustworthy entities (general). 2. Redlists of moral behavior & good political ideology. 3. Coronavirus redlists. 50 Personal Credit Scores at the City Level Some cities have developed a personal credit scoring system for local residents The sophistication of computational algorithms varies a lot: Complex algorithmic models vs. a simpler calculation model based on point additions and deductions Scores can be used in various scenarios The incentive mechanism prioritizes rewards over punishments: High scores are connected with rewards 51 52 Further Applications “Lao Lai” (judgment defaulter) map Ø Displaying the locations of nearby judgment defaulters Ø Alert when the number of judgment defaulters increases Higher People’s Court of HeBei Province 53 Challenges Ethical concerns Ø Privacy Ø Transparency Ø Fairness Endogenous conflicts between different goals ØE.g., trade-offs between effectiveness and privacy protection 54 Takeaways Behavioral insights are widely used in various fields and in many countries Behavioral insights are becoming increasingly popular in the digital environment to shape our behaviors and society The unprecedented scale of these mechanisms necessitates careful study and involvement of citizens to avoid (likely) impacts such as surveillance, oppression etc. 55 Thank you! 56