Southeastern Oklahoma State University



NudgingThis week your Essentials textbook (on page 93) provided a short description of nudging. I feel this topic requires a bit more elaboration. The whole idea of nudging has become important lately and the 2017 Nobel prize in economics was awarded to Richard Thaler, an American economist at the?University of Chicago, for his contributions to behavioral economics and his book (with Cass Sunstein) on nudging: Nudge: Improving Decisions about Health, Wealth and Happiness, explaining how behavioral economics can inform better public policy decisions. Dr. Thaler talks about how a fly in a men’s urinal led to his Nobel prize: What’s a urinal fly, and what does it have to with winning a Nobel Prize? I realize that many women may not be familiar with men’s urinals and so I have a picture of one with a sticker of a fly that nudges men to aim at it. Indeed, it seems that the fly compels men to urinate on it. Notice the position of the fly in the urinal was carefully chosen to reduce urine spillage.Nudging is designed to influence behavior. Nudging alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives. Cab drivers in New York City now print out or display the fare + a suggested tip. Baristas at Starbucks and bar tenders at your favorite watering hole often have a tip jar located so that you can see it and it nudges you to tip. Moreover, these tip jars often contain lots of dollar bills and maybe even a $5 or $20 bill (not so many coins; this protocol in the industry is often called salting). The idea, of course is to nudge you to give a significant gratuity. Last night the Von Bergen’s went to dinner and when we got our bill we were given various tipping options I think the restaurant was nudging me to give a generous tip. The restaurant called it a tip guide but you will now recognize it as a nudge.This topic is certainly important in decision-making which is one of the key topics of Chapter 6. Please be familiar with the idea of nudging as discussed in the following article: Von Bergen, C. W., Kernek, C. R., Bressler, M. S., & Silver, L. S. (2016).?Cueing the Customer Using Nudges and Negative Option Marketing.?Atlantic Marketing Journal,?5(2), 150-168.Professor Angela Duckworth at the University of Pennsylvania (known for her work on grit) discusses an example of a nudge which she calls a Gratitude Nudge. I think those of you who are parents will find this nudge interesting. Another nudge and perhaps the most powerful involves defaults.Look at the figure below (one of my favorite figures in all the social sciences). This shows the percent of people in these countries who consented to be an organ donor (organ donation takes healthy organs and tissues from one person for?transplantation?into another; experts say that the organs from one donor can save or help as many as 50 people.). Organ donation, then, is a good deed! Are those countries on the right (in blue) “better” because their citizens are more willing to help their fellow human beings than those on the left (in yellow)? Let’s look more closely at two countries that are very similar in many ways. Are the Austrians more compassionate and willing to help their countrymen (99.98% of Austrians were willing to donate their organs) than those nasty old Germans (only 12% of Germans were willing to donate their organs)? It would seem so, right?If you agreed you would be wrong! In the countries on the left (in yellow) the citizens had to opt-in (had to agree) to be an organ donor; i.e., they were told that if they wanted to be a donor they should check such and such box on a questionnaire; the default setting was not to be a donor and citizens had to opt-in to be a donor. Since humans are cognitively lazy lots of people (you and me) do nothing and just go with what we are presented.In the countries on the right (in blue) the citizens had to opt-out (had to disagree) to not be an organ donor; i.e., they were told that if they did not want to be a donor they should check such and such box; the default setting was to be a donor. Again, humans are cognitively lazy, and they tended to stick (researchers talk about “stickiness”) with what was initially presented. This figure shows the power of defaults. Default options, or the events or conditions that will be set into place if no alternative is actively chosen, have been shown to influence decisions in domains as diverse as drivers’ insurance, retirement savings, influenza vaccination, and organ donation (Do Defaults Save Lives?). A hallmark of defaults is that they lead gently, without restricting any options. Defaults are one of the most powerful nudges and for those of you in marketing this protocol is often used in advanced-consent marketing or negative option marketing which has gotten more than a few people upset; essentially, you are “in” unless you tell a firm you’re “out.”Here is another example of a default. I received this from Adobe some time ago. Notice how the box under optional offer is already checked. Many people, including me, tend to just go with what was already indicated and if we don’t want it then we have to opt-anizations spend millions of dollars to try to position their products as the default and where a person has to opt-out if they do not want the product or service. Think of Microsoft and Google spending lots of $$$$$s to have their browser loaded on new, for example, Dell computer. Why? Because many of us will tend to stay with the browser that came with the new computer and not expend the effort and energy involved in loading a different browser. Part of power of defaults comes about because of another bias (not mentioned in the Essentials textbook) called the status-quo bias, a preference for the current state of affairs. Status quo bias is evident when people prefer things to stay the same by doing nothing or by sticking with a decision made previously.I found this on the web. Yannick Bikker lists several nudges that he likes at the following web site: . As you can see, there are many kinds of nudges. Another class of nudges increasingly being used deals with foods in school cafeterias. By placing healthier foods in convenient locations in the cafeteria students increased their consumption of healthy foods like fruits and vegetables. To eat less see A low-cost Behavioural Nudge and choice architecture intervention targeting school lunches increases children’s consumption of fruit: A cluster randomised trial. Additionally, Brian Wansink, professor in consumer behavior and nutritional science at Cornell, has used nudging in his research. He found that one of the features that affect how much we eat and hence also how many calories we consume is?plate size. In a study carried out by Wansink and his team it was shown that moving from a 12-inch dinner plate to a 10-inch dinner plate leads people to serve and eat 22% less!Please discuss nudging and what you think about it? Provide other examples. Be sure to be familiar with defaults. ? ................
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