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The formulation of nudge theory originated from cyberneticist Dr. James Wilk in 1995, described by Brunel University researcher D.J. Stewart as the “art of nudge” (qtd. in Wilk 71), or the construction of choice architecture aimed at altering human behavior in a predictable way. The theory rose to prominence with the 2008 publication of Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler and Cass R. Sunstein, based on the work of Nobel prize-winning psychologists Daniel Kahneman and Amos Tversky (Thaler and Sunstein, Nudge 23).

Table 1. A diagram illustrating examples of differences between enforcing and nudging individuals to make certain choices.

BACKGROUND

LITERATURE REVIEW

Due to the widespread popularity of the literature of Thaler and Sunstein, the definition of a nudge as an aspect of choice architecture designed to alter individuals’ behaviors in a predictable manner became accepted in the United States, the United Kingdom, and other scholarly groups, with further researchers drawing upon the initial work of these researchers in their studies (O'Hanlon and Wilk 18). A further concept was identified by Thaler and Sunstein in their early work as known as choice architecture (Thaler and Sunstein, Nudge 11). Endorsing the practice of improving consumer decision-making processes for their betterment through minimizing biases and errors due to bounded rationality, Thaler and Sunstein identified approaches that would allow larger bodies to effective utilize their work in practice.

CHOICE ARCHITECTURE

n order to properly implement liberal paternalism, the full extent of the practice must be adhered to. In addition to ensuring that it allows for an individual to determine their own course of action should the need arise, it should also allow an individual to properly determine their own course of action in the case of rational thought, without the coercion provided to individuals prone to heuristics, or to otherwise engaging in actions against their self-interest. By adhering to such a course of action, nudge theory can not only provide an additive approach to existing practices within governing bodies and consumerism that ensure the wellbeing of the consumer, but it can also provide alternative perspectives into the perspective of the consumer, especially in regards to the requirement of liberal paternalism that entails for the authoritative body to adhere to practices that only optimize the wellbeing of the individuals.

CONCLUSIONS

PRINCIPLES OF HEURISTICS

The concept of heuristics was first explored by Nobel laureate Herbert A. Simon through his work into bounded rationality, the idea that rational beings are limited in their realm of thought when making decisions (Anomaly). Such limitations include the time available to make a decision, the cognitive limitations of the mind, and the scope of the problem at hand.Simon additionally coined the term “satisficing”, referring to the situations in which individuals choose a situation despite understanding that it could be optimized in other means. These often result in solutions that are merely “good enough” for the individual in the time being, offset by the inability to sacrifice additional time or resources for a better option (qtd. in Anomaly).

Table 2. A diagram illustrating the different forms of well-known heuristics and their functions.

The primary bulk of existing literature surrounding nudge theory and liberal paternalism can be credited to Thaler and Sunstein, although much of their writing was later developed upon in Kahneman’s 2013 work Thinking, Fast and Slow, which was built upon his earlier work with Tversky. Much of the literature by Thaler and Sunstein regards a series of concepts, many of which have been coined by the pair, including nudge theory, choice architecture, and liberal paternalism (Kahneman 10).

Stuyvesant High School

Sharon Lin

Nudge Theory: The Legitimacy of Implementing Heuristics in Choice Architecture

Enforce Nudge

Instructing a child to study Improving the availability of study materials

Erecting signs to instruct shoppers to purchase healthy snacks

Placing healthy snacks near the checkout aisles in supermarkets

Advertisements encouraging individuals to drink more water

Celebrities explicitly drinking more water in television programs

Joining a weight loss program Using a smaller plate at meals

Developing a weekly shopping budget Bringing less cash when shopping

Heuristic Explanation Example

Anchoring and Adjustment The human tendency to rely too heavily on the first piece of information offered

When given a base number for bartering, individuals will tend to group their wagers on their perceived value of the object, which is often closer to the initial proposed value than the actual value of the object.

Availability The process in which individuals will make judgements about the probability of an event or occurrence based on the ease of determining examples of such an event

Individuals tend to assume that more words begin with the letter K than have the letter K as their third letter due to the ease of recalling examples of the former, and the difficulty of recalling examples of the latter.

Representativeness The process in which individuals judge the probability of an event under uncertainty based on its similarities to the scenarios determined in their mind

Individuals often assume that medical symptoms should resemble their cause or treatment. For instance, many assume that ulcers are caused by stressed, when they are in fact caused by bacteria.

Naïve diversification When making several choices at once, individuals tend to diversify more than when making the same choices in a sequence

When choosing meals for a week, an individual will tend to choose different types of meals, as opposed to when making the decision for each day, in which the individual is more likely to choose the same type of meal each day.

Escalation of commitment (“sunk cost fallacy”)

Individuals will justify an increased commitment in a decision based on cumulative prior investment despite new evidence suggesting that the current costs outweigh the benefits of continuation

Even after sustaining heavy losses, a company will often continue to operate in order to sustain their public image despite the fact that they will only continue to lose increasing amounts of profit.

Familiarity Individuals assume that the conditions underlying their past behavior will stay true for their present situation and that their past behavior can thus be applied to their current situation

Consumers tend to purchase the same items from the same brands due to brand loyalty and familiarity with the items sold.

BIBLIOGRAPHYAbbandonato, Alex. "Review of Mark D. White’s The Manipulation of Choice: Ethics and

Libertarian Paternalism. New York: Palgrave Macmillan, 2013, 208 Pp." Erasmus Journal for Philosophy and Economics 6.2 (2013): 78-83. Web. 5 Jan. 2017.

Abdukadirov, Sherzod. "Who Should Nudge?" Nudge Theory in Action (2016): 159-91. Web.

Anomaly, Jonny. "Book Review: The Manipulation of Choice: Ethics and Libertarian

Paternalism, by Mark D. White." The Independent Institute. Independent Institute, Fall 2013. Web. 05 Jan. 2017.

Bujari, Armir, and Nicola Miotto. "Nudge Nudge: A Proximity Based Social Application." 2011 IFIP Wireless Days (WD) (2011): n. pag. Web.

Carlin, Bruce Ian, Simon Gervais, and Gustavo Manso. "When Does Libertarian Paternalism Work?" (2009): n. pag. Web.

Graboyes, Robert, and Jessica Carges. "Nudges in Health Care." Nudge Theory in Action (2016): 289-315. Web.

Hansen, Pelle Guldborg, Laurits Rohden Skov, and Katrine Lund Skov. "Making Healthy Choices Easier: Regulation versus Nudging." Annual Review of Public Health 37.1 (2016): 237-51. Web.

Harvey, Nigel. "Use of Heuristics: Insights from Forecasting Research." Thinking & Reasoning 13.1 (2007): 5-24. Web.

Hausman, Daniel M., and Michael S. Mcpherson. "The Philosophical Foundations of Mainstream Normative Economics." The Philosophy of Economics (2008): 226-50. Web.

Kahneman, Daniel. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux, 2011. Print.

Kelly, Jamie. "Libertarian Paternalism, Utilitarianism, and Justice." Paternalism: Theory and Practice (2013): 216-30. Web.

Lakhani, Nina. "Unhealthy Lifestyles Here to Stay, in Spite of Costly Campaigns." The

Independent. Independent Digital News and Media, 6 Dec. 2008. Web. 05 Jan. 2017.

Lawton, Graham. "A Nudge in the Right Direction." New Scientist 218.2922 (2013): 3. Web.

Lunn, Pete. "Regulatory Policy and Behavioural Economics." Regulatory Policy and Behavioural Economics (2014): 13-70. Web.

Marsh, Tim. "Cast No Shadow." Safety Leadership (n.d.): n. pag. SHPOnline. Safety Leadership,

Jan. 2012. Web. 5 Jan. 2017.

Matravers, M. "Review: Contexts of Justice: Political Philosophy beyond Liberalism and Communitarianism." Mind 113.451 (2004): 539-41. Web.

McSmith, Andy. "First Obama, Now Cameron Embraces 'Nudge Theory'" The Independent.

Independent Digital News and Media, 11 Aug. 2010. Web. 05 Jan. 2017.

O'Hanlon, Bill, and James Wilk. Shifting Contexts: The Generation of Effective Psychotherapy.

New York, NY: Guilford, 1987. Print.

Rachlin, Howard. "Choice Architecture: A Review of Why Nudge: The Politics of Libertarian Paternalism." Journal of the Experimental Analysis of Behavior 104.2 (2015): 198-203. Web.

Rebonato, Riccardo. "A Critical Assessment of Libertarian Paternalism." Journal of Consumer Policy 37.3 (2014): 357-96. Web.

Rebonato, Riccardo. "A Critical Assessment of Libertarian Paternalism." SSRN Electronic Journal (n.d.): n. pag. Web.

Sunstein, Cass R. Why Nudge?: The Politics of Libertarian Paternalism. New Haven: Yale UP,

2014. Print.

Sunstein, Cass R., and Richard H. Thaler. "Libertarian Paternalism Is Not an Oxymoron." The Construction of Preference (n.d.): 689-708. Web.

Sunstein, Cass R., and Richard H. Thaler. "Libertarian Paternalism Is Not an Oxymoron." The

University of Chicago Law Review 70.4 (2003): 1159. Web.

Sunstein, Cass R. "The Ethics of Choice Architecture." Choice Architecture in Democracies (2016): 19-74. Web.

Thaler, Richard H., and Cass R. Sunstein. "Libertarian Paternalism." American Economic

Review 93.2 (2003): 175-79. Web.

Thaler, Richard H., and Cass R. Sunstein. Nudge: Improving Decisions about Health, Wealth, and Happiness. New Haven, CT: Yale UP, 2008. Print.

Veetil, Vipin P. "Libertarian Paternalism Is an Oxymoron: An Essay in Defence of Liberty." European Journal of Law and Economics 31.3 (2010): 321-34. Web.

Wells, Peter. "A Nudge One Way, A Nudge the Other: Libertarian Paternalism as Political Strategy." People, Place and Policy Online 4.3 (2010): 111-18. Web.

White, Mark D. The Manipulation of Choice: Ethics and Libertarian Paternalism. New York,

NY: Palgrave Macmillan, 2013. Print.

Wilk, James. "Mind, Nature and the Emerging Science of Change: An Introduction to

Metamorphology." Metadebates on Science (1999): 71-87. Web. 5 Jan. 2017.

Wilkinson, T. M. "Libertarian Paternalism: A Review Essay." Political Science 67.1 (2015): 73-79. Web.

Diagram 1: A flow chart illustrating the process of determining the viability of a liberal paternalistic choice architecture