This article is an excerpt from the Shortform summary of "Nudge" by Richard H. Thaler and Cass R. Sunstein. Shortform has the world's best summaries of books you should be reading.
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What is nudge management? Why is it important and how can you make it work for you?
Nudge management is the process of designing and maintaining effective nudges. With appropriate choice architecture, you get better results.
Read on to learn about nudge management examples and strategies.
Designing Choices for Nudge Management
One of the most effective ways to nudge a chooser is the educated and purposeful design of the choice system.
No matter what choices are being offered, choice architects must honor the psychological principle of stimulus response capability—that is, the principle that a particular stimulus must correspond to the desired action. For example, if a door only opens in one direction, don’t put handles on both sides: Put the handles on the side that pulls open, and a flat plate on the side that should be pushed. Similarly, if you want people to make good choices, don’t present each choice uniformly or randomly.
Nudge Management Examples of Defaults
Due to human predilections like the status quo bias (see Chapter 1), choosers will often opt for the choice that takes the least effort: the default that requires the chooser to do nothing. And so choice architects can drastically affect outcomes by designing their default options conscientiously. This is essential for good nudge management.
For example, say you’re currently enrolled in a particular health insurance option through your employer and you completely space on the next year’s open enrollment period. Should your employer assume you don’t want health coverage for the following year, or should it re-enroll you in the same option you had the previous year? Most of us would choose the latter, which means that’s the better default.
(Sometimes, in complex or fraught circumstances, choice architects should omit defaults. For example, if federal law mandates that schools supply student information to military recruiters but allows for opt outs, the school might default to neither option and ask parents or students to make the choice themselves.)
Anticipate Error
Sophisticated choice architects not only know choosers make mistakes but also know what kind of mistakes choosers make.
Take, for example, a drug manufacturer developing a new medication. Should that medication be designed to be taken once a day, once every other day, twice a day, or three times a week? The best option is once a day, because the more regularly a person has to take a dose, the fewer opportunities that person has to forget to take a dose.
Transmit Feedback
Humans can learn from their mistakes, but all too often, choice systems neglect to provide feedback to choosers. A well-designed choice system gives choosers instant feedback on the choices they’ve made.
Consider an online interface for a health insurance marketplace. When you select a particular health insurance plan and proceed to finalize your choice, the system might ask a question or two about your health needs or finances before allowing you to make the election. If your answers indicate that your particular election might not be the best plan for you, the system might alert you to the mismatch.
Draw Choosers a Map
Often, especially when it comes to hard decisions in specialized fields like medicine, choosers have difficulty “mapping” their choices onto their eventual benefits. Choice architects can aid choosers by explaining the benefits and outcomes of choices in familiar terms, so that mapping becomes easy.
Structure Large Choice Sets
Choice architects’ job is easy when there are few options to choose from—humans can relatively easily distinguish between three or four options, weigh the benefits and tradeoffs of each, and make a well-grounded decision. When there are many options, however—dozens, say—it’s incumbent on choice architects to structure those choices to minimize confusion and error.
A company like Amazon is a good nudge management example. It has mastered the art of structuring choice. For example, rather than presenting customers with random bundles of goods, Amazon uses browsing and order history to filter options and make recommendations.
(Of course, “collaborative filtering” techniques like these limit our chances to discover something completely new, because they constantly offer us choices based on our personal tastes or prior behavior. Some choice architects—newspaper publishers, for example—nudge us toward new and important information regardless of our personal tastes.)
Effective Nudge Management Examples of Incentives
Although the price function—whether something is expensive or cheap—gives a chooser enough information to make a sound decision most of the time, sometimes Humans (rather than Econs) don’t notice the relevant economic incentive. This is where creative choice architecture can be a boon—by making the economic incentives of a given choice more “salient” (or obvious).
For example, when we crank A/C on a hot day, we may have an inkling that we’re incurring a cost, but we don’t truly recognize it until we receive our electricity bill at the end of the month. If our thermostat displayed the cost per hour of the new colder temperature—thereby making the cost of our choice more “salient”—we might be more inclined to think twice about lowering the thermostat.
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- Why subtle changes, like switching the order of two choices, can dramatically change your response
- How to increase the organ donation rate by over 50% through one simple change
- The best way for society to balance individual freedom with social welfare
