Nudge covers the ideas around choice architecture, and the power that these architects have to "nudge" a decision one way or another. Because of this power, the authors focus on libertarian-paternalism as a guiding principle, people should be able to make the decision they want (even if they are detrimental at times), while the defaults should be oriented around taking care of everyone. A lot of the material in the book builds on the research from Kahneman and Tversky.
Most of the biggest decisions in-life don't come with a lot of practice, and is a core driver for why human's act differently than the econs would expect. Whether buying a house, car or dealing with medical issues. I like this framing for the challenge of macro vs. micro decisions and how different our answers are to both.
- Benefits Now – Costs Later (and also Costs Now – Benefits Later)
- Degree of Difficulty
- Knowing What You Like
There is a challenge in translation of choices and their alternatives into actual experiences and outcomes, rarely is anything perfectly comparable.
Self-control comes into this. The further choices and consequences are separated in time the harder self-control will be. Good investments typically require a cost today (exercise) and it can be hard to connect the two.
Record, Evaluate and Compare alternative pirces. You can use a compensatory strategy or elimination by aspect strategy when dealing with imperfect data.
- Understand Mapping
- Give Feedback
- Expect Errors
- Structure Complex Choices
Humans vs. Econs
The book is really focused on sorting between two types, the econs who are fully rational and always make the most optimal choice and humans, everyday folks who are victim of biases and poor decision making.
For econs, you're never worse off having more decisions, the reality though is that people don't have the patients or time to fully sort all options and find the ideal solution.
Another good story was from a party at the author's home, where many Econs were in attendance. A bowl of cashews was being eaten by everyone, and once the host took them away the Econs sighed relief of not having the temptation — shows even the rational Econs act irrationally (they have a great dinner coming up). They have 3 choices, eat some, more and all, and the different from 7:15 to 7:30 was that everyone was just eating more.
Temptations and mindless are a explored as ways humans make bad choices, and being in a hot or cold state can have a big influence on how likely a human is to make the wrong (less ideal) choice.
Similar to the Kahneman concept of experiencing self and remembering self, George Lowenstein explored the hot cold empathy gap, and contexts impact on choice. Humans underestimate our hot state temptation.
A study was done where a bowl of soup was secretly re-filled, and most people just kept eating even though they are easily full. A similar experiment where the size of the popcorn container is adjusted had the same outcome, humans consumed more.
- Planning fallacy
- Status Quo
- Anchoring, Availability and Representative
- Overconfidence and unrealistic optimism
- Inertia and Path of Least Resistance (The yea, whatever heuristic)
- Self-Serving (During bargaining we look for what benefits us ex. Refs at a game)
building on the status quo bias is that the important of defaults, consumers are unlikely to ever change these, and what we set as defaults can have substantial downstream consequences
10 people died vs. 90/100 are alive, while the content of statements are true, the effect of each is quite different, framing is a powerful way to nudge decision one way or another.
The book explores how bad we are at handling money, and often we are carrying a balance on our credit card while having money in a savings account, but mental accounting is a way that humans deal with money is it's many stressors.
Humans like to conform, and the people we are spending time with and around have a large impact on how we act and feel.
- A study was shared where couples who like alike are happier
- Obesity is actually contagious
- Academic performance is strongly correlated to peers
- Judge split 2/3 when others are of opposing party
- Consumption norms, we eat more or less depending on the group
Solomon Ash has research on group decision influence (spotlight effect and global music downloads, and social impact on what is considered popular)
Post Completion Errors
From a UX standpoint, there is an opportunity to nudge and offers designs to remove these types of errors.
- Forgetting to put the gas cap on
- Leaving an original copy in the copier
- Leaving your debit card in the ATM
- Who uses its?
- Who chooses who pays?
- Who profits?
Buying a car vs. taking a cab decision, easy to forget the forgone opportunity cost (needed to spend \$10K on fees). A cheaper taxi option feels more expensive because it's always in your face each time you pay. It becomes an irrational mental accounting issue.
Save More Tomorrow
- Think they should be saving more
- Self control easier to adopt if they take place in the future (planning to diet, but not today)
- Loss aversion
- Money illusion, losses are felt in nominal dollars, not inflation dollars
- Power of Inertia
Chemical storage and restaruant health scores are a way to for positive outcomes via disclosure incentives