(Nudging as Part of Behavioural Economics cont. 2)

When to Use Nudges

"...people will need nudges for the decisions that are difficult and rare, for which they do not get prompt feedback, and when they have trouble translating aspects of the situation in terms that they can easily understand..."
Richard Thaler et al, 2021

Need to be careful of human frailty, ie don't exploit people's ignorance, confusion and vulnerability.

NB If something is more complicated than it needs to be, people can be readily exploited.

Questions to think about
"...- what kinds of nudges to offer?
    - how subtle should the nudges be?
    - what do you need to know to design the best possible choice environment?..."
Richard Thaler et al, 2021

NB the most difficult decisions to make are those that test your capacity of self-control; this is most likely to arise when choices and their consequences are separated in time like investing for the future, ie costs are immediate while positive impacts are delayed. Some examples:

    - 'investment goods' like exercise, money into retirement fund, insurance, etc

    - 'sinful goods' like processed/fast food, alcohol, cigarettes, etc.

For the latter we get the pleasure now and suffer the consequences later.

Frequency - practise ie trial and error/experimentation, helps us improve (maybe makes you perfect!!!!). Unfortunately, generally the higher the stakes are, the less often you practice.

Linked with practise is learning and feedback. However, most situations you are in are not structured to provide complete feedback, ie you usually get feedback only on the options you select, not the ones you rejected, ie alternatives.

Furthermore, if you lack experience of alternatives, it makes the choices harder.
"...when people have a hard time predicting how their choices will end up affecting their lives, they have less to gain by numerous options..."
Richard Thaler et al, 2021

Some people think that market forces like competition, etc can be good nudges, ie price is a reflection of quality and value. There is much evidence around to claim otherwise. At times organisations have incentives to play to and manipulate people's beliefs, fragilities, etc.