Nudge, Boost, or Design? Limitations of behaviorally informed policy under social interaction

Abstract

Nudge and boost are two competing approaches to applying the psychology of reasoning and decision making to improve policy. Whereas nudges rely on manipulation of choice architecture to steer people towards better choices, the objective of boosts is to develop good decision-making competences. Proponents of both approaches claim capacity to enhance social welfare through better individual decisions. We suggest that such efforts should involve a more careful analysis of how individual and social welfare are related in the policy context. First, individual rationality is not always sufficient or necessary for improving collective outcomes. Second, collective outcomes of complex social interactions among individuals are largely ignored by the focus of both nudge and boost on individual decisions. We suggest that the design of mechanisms and social norms can sometimes lead to better collective outcomes than nudge and boost, and present conditions under which the three approaches (nudge, boost, and design) can be expected to enhance social welfare.

Self-nudging and the citizen choice architect

“…But can policymakers really assume that everybody wants to save for retirement, for example? In many cases, the assumption of preference homogeneity is questionable and thus undermines a nudge's goal of enhancing welfare (see Reijula et al, 2018).…”

The ecology of competition: A theory of risk–reward environments in adaptive decision making.

“…Instead, a theory of the ecology can suggest how ecologically rational actors should decide when conditions are less than ideal (Leuker et al, 2020) or when ecological anomalies occur-such as opportunities arising that are too good to be true (see Kaunitz et al, 2017;Leuker et al, 2019b). This approach is therefore highly relevant for questions about choice architecture and how to help people to improve their decision making (Thaler & Sunstein, 2009;Johnson et al, 2012;Hertwig & Grüne-Yanoff, 2017;Reijula et al, 2018).…”

Nudging with Care: The Risks and Benefits of Social Information

“…suggest that, since individuals are members of social groups, new norms must be created to successfully change behavior Reijula et al (2018). also point out that policy-makers must understand the limitations of nudging, mostly because nudging focuses on individual behavior change, whereas we often need collective change.…”