Summary: A Practitioner's Guide To Nudging
A Practitioner’s Guide To
Nudging
Kim Ly, Nina Mažar, Min Zhao and Dilip Soman
15 March, 2013
Elizabeth Lyons and Julian House contributed research and analysis to this report.
Research Report Series
Behavioural Economics in Action
Rotman School of Management
University of Toronto
ROTMAN SCHOOL OF MANAGEMENT
2
Correspondence and Acknowledgements
For questions and enquiries, please contact:
Professor Dilip Soman
Rotman School of Management
University of Toronto
105 St. George Street
Toronto, ON M5S 3E6
Email: dilip.soman@rotman.utoronto.ca
Phone Number: (416) 946-0195
This report is inspired by the work of Richard Thaler and Cass Sunstein. We thank
Liam Delaney, Marc-Andre Pigeon and Richard Thaler for …show more content…
In other domains such as littering, individuals might not always actively consider what the right behaviour should be. In this case, nudges are designed to activate a desired behaviour or norm and influence a decision that an individual is indifferent or inattentive to. These behaviours are not at the top-of-mind for the majority of people; hence people are unlikely to impose nudges that influence these behaviours upon themselves. Therefore, nudges that seek to activate latent or non-existent behavioural standards in people rely on exposing them to conditions in which those standards become more salient. The second dimension considers whether a nudge will be voluntarily adopted. Selfimposed nudges are voluntarily adopted by people who wish to enact a behavioural standard that they feel is important. Such nudges may include using products, such as the well-known Save More Tomorrow™ Program8, or practices such as voluntarily asking for a reduction on one’s credit limit. Externally-imposed nudges do not require people to voluntarily seek them out. Rather they passively shape behaviour because of the way they present available options without constraining …show more content…
4. Environmental and social factors such as peer pressure and lengthy application processes. These factors can also influence the outcome.
After auditing the decision, a map of the decision-making process should be made. This decision map outlines the critical actions involved with following
ROTMAN SCHOOL OF MANAGEMENT
15
through with a decision. Figure 2 shows a decision map for contributing to a retirement savings plan.
Figure 2. A decision map for retirement savings
Typically, the outcome that a practitioner is aiming to influence is the culmination of a number of smaller decisions and actions. One of the biggest challenges in this domain (and indeed, domains like health where the outcomes are distant and seemingly irrelevant to a young person) is to trigger the importance of health and wealth management26. The desire to achieve an outcome (e.g., savings for a family home, children’s education expenses) could be the result of a life event (e.g., marriage, birth of a child) that motivates an individual to complete the needed actions (e.g., open an account, purchase a fund). These life events are good moments to nudge people to action.
4.2. SELECT THE
Nudging
Kim Ly, Nina Mažar, Min Zhao and Dilip Soman
15 March, 2013
Elizabeth Lyons and Julian House contributed research and analysis to this report.
Research Report Series
Behavioural Economics in Action
Rotman School of Management
University of Toronto
ROTMAN SCHOOL OF MANAGEMENT
2
Correspondence and Acknowledgements
For questions and enquiries, please contact:
Professor Dilip Soman
Rotman School of Management
University of Toronto
105 St. George Street
Toronto, ON M5S 3E6
Email: dilip.soman@rotman.utoronto.ca
Phone Number: (416) 946-0195
This report is inspired by the work of Richard Thaler and Cass Sunstein. We thank
Liam Delaney, Marc-Andre Pigeon and Richard Thaler for …show more content…
In other domains such as littering, individuals might not always actively consider what the right behaviour should be. In this case, nudges are designed to activate a desired behaviour or norm and influence a decision that an individual is indifferent or inattentive to. These behaviours are not at the top-of-mind for the majority of people; hence people are unlikely to impose nudges that influence these behaviours upon themselves. Therefore, nudges that seek to activate latent or non-existent behavioural standards in people rely on exposing them to conditions in which those standards become more salient. The second dimension considers whether a nudge will be voluntarily adopted. Selfimposed nudges are voluntarily adopted by people who wish to enact a behavioural standard that they feel is important. Such nudges may include using products, such as the well-known Save More Tomorrow™ Program8, or practices such as voluntarily asking for a reduction on one’s credit limit. Externally-imposed nudges do not require people to voluntarily seek them out. Rather they passively shape behaviour because of the way they present available options without constraining …show more content…
4. Environmental and social factors such as peer pressure and lengthy application processes. These factors can also influence the outcome.
After auditing the decision, a map of the decision-making process should be made. This decision map outlines the critical actions involved with following
ROTMAN SCHOOL OF MANAGEMENT
15
through with a decision. Figure 2 shows a decision map for contributing to a retirement savings plan.
Figure 2. A decision map for retirement savings
Typically, the outcome that a practitioner is aiming to influence is the culmination of a number of smaller decisions and actions. One of the biggest challenges in this domain (and indeed, domains like health where the outcomes are distant and seemingly irrelevant to a young person) is to trigger the importance of health and wealth management26. The desire to achieve an outcome (e.g., savings for a family home, children’s education expenses) could be the result of a life event (e.g., marriage, birth of a child) that motivates an individual to complete the needed actions (e.g., open an account, purchase a fund). These life events are good moments to nudge people to action.
4.2. SELECT THE