Nudge Richard Thaler Quotes

A choice architect has the responsibility for organizing the context in which people make decisions.

First, never underestimate the power of inertia. Second, that power can be harnessed.

The combination of loss aversion with mindless choosing implies that if an option is designated as the “default,” it will attract a large market share. Default options thus act as powerful nudges.

people have a strong tendency to go along with the status quo or default option.

you want to nudge people into socially desirable behavior, do not, by any means, let them know that their current actions are better than the social norm.

The first misconception is that it is possible to avoid influencing people’s choices.

Libertarian paternalism is a relatively weak, soft, and nonintrusive type of paternalism because choices are not blocked, fenced off, or significantly burdened.

A nudge, as we will use the term, is any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives.

The moral is that people are paying less attention to you than you believe.

Just as no building lacks an architecture, so no choice lacks a context.

The more choices you give people, the more help with decision making you need to provide.

Schiphol Airport in Amsterdam. There the authorities have etched the image of a black housefly into each urinal. It seems that men usually do not pay much attention to where they aim, which can create a bit of a mess, but if they see a target, attention and therefore accuracy are much increased.

So to put it simply, forcing people to choose is not always wise, and remaining neutral is not always possible.

An especially good way to gain weight is to have dinner with other people. On average, those who eat with one other person eat about 35 percent more than they do when they are alone; members of a group of four eat about 75 percent more; those in groups of seven or more eat 96 percent more.

Loss aversion helps produce inertia, meaning a strong desire to stick with your current holdings.

MBA students are not the only ones overconfident about their abilities. The “above average” effect is pervasive. Ninety percent of all drivers think they are above average behind the wheel,

People are unrealistically optimistic even when the stakes are high. About 50 percent of marriages end in divorce, and this is a statistic most people have heard. But around the time of the ceremony, almost all couples believe that there is approximately a zero percent chance that their marriage will end in divorce—even those who have already been divorced!10 (Second marriage, Samuel Johnson once quipped, “is the triumph of hope over experience.”)

Recall that people like to do what most people think it is right to do; recall too that people like to do what most people actually do.

In complex situations, the Just Maximize Choices mantra is not enough to create good policy.

make an active decision

Markowitz’s strategy can be viewed as one example of what might be called the diversification heuristic. “When in doubt, diversify.

Real people have trouble with long division if they don’t have a calculator, sometimes forget their spouse’s birthday, and have a hangover on New Year’s Day.

One of the causes of status quo bias is a lack of attention. Many people adopt what we will call the “yeah, whatever” heuristic.

our understanding of human behavior can be improved by appreciating how people systematically go wrong.

Roughly speaking, losing something makes you twice as miserable as gaining the same thing makes you happy. In more technical language, people are “loss averse.

a nudge is any factor that significantly alters the behavior of Humans,

First, incentives are not properly aligned. If you engage in environmentally costly behavior next year, through your consumption choices, you will probably pay nothing for the environmental harms that you inflict.

In economics (and in ordinary life), a basic principle is that you can never be made worse off by having more options, because you can always turn them down. Before Thaler removed the nuts the group had the choice of whether to eat the nuts or not—now they didn’t. In the land of Econs, it is against the law to be happy about this!

Unrealistic optimism is a pervasive feature of human life; it characterizes most people in most social categories. When they overestimate their personal immunity from harm, people may fail to take sensible preventive steps. If people are running risks because of unrealistic optimism, they might be able to benefit from a nudge. In fact, we have already mentioned one possibility: if people are reminded of a bad event, they may not continue to be so optimistic.

First, never underestimate the power of inertia. Second, that power can be harnessed. If private companies or public officials think that one policy produces better outcomes, they can greatly influence the outcome by choosing it as the default.

A slightly longer answer is that people will need nudges for decisions that are difficult and rare, for which they do not get prompt feedback, and when they have trouble translating aspects of the situation into terms that they can easily understand. In

Luckily, scientists have uncovered a few secrets to help make the process of creating habits easier. In their bestselling book Nudge, the economist Richard Thaler and the law professor Cass Sunstein show how to influence other people’s behavior through carefully designed choices, or what they called “choice architecture.” You

It turns out that if you ask people, the day before the election, whether they intend to vote, you can increase the probability of their voting by as much as 25 percent!

Doctors are crucial choice architects, and with an understanding of how Humans think, they could do far more to improve people’s health and thus to lengthen their lives.

The nudge provided by asking people what they intend to do can be accentuated by asking them when and how they plan to do it. This

we will see, loss aversion operates as a kind of cognitive nudge, pressing us not to make changes, even when

specific values to objects. When they have to give something up, they are hurt more than they are pleased if they acquire the very same thing.

(Hint: always take the largest deductible you can. It will save you a lot of money over the long run.)

Recall that the more insurance you buy, the more you pay, and the right to sue is a form of insurance.

people’s choices are pervasively influenced by the design elements selected by choice architects.

That does not mean something is wrong with us as humans, but it does mean that our understanding of human behavior can be improved by appreciating how people systematically go wrong.

What this means is that people do not assign specific values to objects. When they have to give something up, they are hurt more than they are pleased if they acquire the very same thing.

special case of this rule of thumb is what might be called the “1/n” heuristic: “When faced with ‘n’ options, divide assets evenly across the options.”3 Put the same number of eggs in each basket.

Benefits Now—Costs Later We have seen that predictable problems arise when people must make decisions that test their capacity for self-control. Many choices in life, such as whether to wear a blue shirt or a white one, lack important self-control elements. Self-control issues are most likely to arise when choices and their consequences are separated in time. At one extreme are what might be called investment goods, such as exercise, flossing, and dieting. For these goods the costs are borne immediately, but the benefits are delayed. For investment goods, most people err on the side of doing too little. Although there are some exercise nuts and flossing freaks, it seems safe to say that not many people are resolving on New Year’s Eve to floss less next year and to stop using the exercise bike so much. At the other extreme are what might be called sinful goods: smoking, alcohol, and jumbo chocolate doughnuts are in this category. We get the pleasure now and suffer the consequences later. Again we can use the New Year’s resolution test: how many people vow to smoke more cigarettes, drink more martinis, or have more chocolate donuts in the morning next year? Both investment goods and sinful goods are prime candidates for nudges. Most (nonanorexic) people do not need any special encouragement to eat another brownie, but they could use some help exercising more.

The false assumption is that almost all people, almost all of the time, make choices that are in their best interest or at the very least are better than the choices that would be made by someone else.

The winning formulation was to say, “Nine out of ten people in the UK pay their tax on time. You are currently in the very small minority of people who have not paid us yet.” Notice this short message conveys (truthfully) both that most people pay on time and that you are in the minority of those who don’t. A follow-up experiment found that the message could be further strengthened by making it local, as in “Nine out of ten taxpayers in Manchester pay on time.” The impact of these letters was substantial, increasing the number of people paying within the first twenty-three days by as much as five percentage points.24 That may not sound like a large

If you look at economics textbooks, you will learn that homo economicus can think like Albert Einstein, store as much memory as IBM’s Big Blue, and exercise the willpower of Mahatma Gandhi. Really. But the folks that we know are not like that. Real people have trouble with long division if they don’t have a calculator, sometimes forget their spouse’s birthday, and have a hangover on New Year’s Day. They are not homo economicus; they are homo sapiens.

We are also greatly influenced by consumption norms within the relevant group. A light eater eats much more in a group of heavy eaters. A heavy eater will show more restraint in a light-eating group. The group average thus exerts a significant influence. But there are gender differences as well. Women often eat less on dates; men tend to eat a lot more, apparently with the belief that women are impressed by a lot of manly eating. (Note to men: they aren’t.) So

Large plates and large packages mean more eating; they are a form of choice architecture, and they work as major nudges. (Hint: if you would like to lose weight, get smaller plates, buy little packages of what you like, and don’t keep tempting food in the refrigerator.)

You might think that employees have especially good information about their firm’s future prospects, but a careful study by Shlomo Benartzi (2001) finds otherwise. Specifically, there is no correlation between the allocation to company stock and subsequent stock performance.

It follows that either desirable or undesirable behavior can be increased, at least to some extent, by drawing public attention to what others are doing. (Note to political parties: If you would like to increase turnout, please do not lament the large numbers of people who fail to vote.)*

Or consider this one: people’s judgments about strangers are affected by whether they are drinking iced coffee or hot coffee! Those given iced coffee are more likely to see other people as more selfish, less sociable, and, well, colder than those who are given hot coffee.27 This, too, happens quite unconsciously.

There is a new wave of interest in exploring how to frame choices so that people make better decisions. Richard Thaler and Cass Sunstein, professors of economics and law, respectively, teamed up to write Nudge: Improving Decisions About Health, Wealth, and Happiness, which advocates using defaults to nudge us to make better choices.9 Even when we are choosing in our own interests, we often choose unwisely. When employees have the option of participating in a retirement-savings scheme, many do not, despite the financial advantages of doing so. If their employer instead automatically enrolls them, giving them the choice of opting out, participation jumps dramatically

Libertarian paternalism is a relatively weak, soft, and nonintrusive type of paternalism because choices are not blocked, fenced off, or significantly burdened. If people want to smoke cigarettes, to eat a lot of candy, to choose an unsuitable health care plan, or to fail to save for retirement, libertarian paternalists will not force them to do otherwise—

The money that has recently been won is called “house money” because in gambling parlance the casino is referred to as the house. Betting some of the money that you have just won is referred to as “gambling with the house’s money,” as if it were, somehow, different from some other kind of money. Experimental evidence reveals that people are more willing to gamble with money that they consider house money.

A choice architect has the responsibility for organizing the context in which people make decisions. [T]here are many parallels between choice architecture and more traditional forms of architecture. A crucial parallel is that there is no such thing as a “neutral” design. [A]s good architects know, seemingly arbitrary decisions, such as where to locate the bathrooms, will have subtle influences on how the people who use the building interact. [S]mall and apparently insignificant details can have major impacts on people’s behavior. [I]n many cases, the power of these small details comes from focusing the attention of users in a particular direction. Good architects realize that although they can’t build the perfect building, they can make some design choices that will have beneficial effects. And just as a building architect must eventually build some particular building, a choice architect must [for example] choose a particular arrangement of food options at lunch, and by so doing she can influence what people eat. She can nudge.

A third positive result even further from the traditional tool kit of financial incentives comes from a recent randomized control trial conducted in the U.K., using the increasingly popular and low-cost method of text reminders. This intervention involved sending texts to half the parents in some school in advance of a major math test to let them know that their child had a test coming up in five days, then in three days, then in one day. The researchers call this approach “pre-informing.” The other half of parents did not receive the texts. The pre-informing texts increased student performance on the math test by the equivalent of one additional month of schooling, and students in the bottom quartile benefited most. These children gained the equivalent of two additional months of schooling, relative to the control group. Afterward, both parents and students said they wanted to stick with the program, showing that they appreciated being nudged. This program also belies the frequent claim, unsupported by any evidence, that nudges must be secret to be effective.

After all, behavioral economists have spent years demonstrating the clear relationship between making something easy to do and getting people to actually do it. My very good friend and longtime collaborator Richard Thaler puts it this way: “My number-one mantra from Nudge [his book, cowritten with Cass Sunstein, on the application of behavioral economic principles to public policy] is, ‘Make it easy.’ When I say make it easy, what I mean is, if you want to get somebody to do something, make it easy. If you want to get people to eat healthier foods, then put healthier foods in the cafeteria, and make them easier to find, and make them taste better. So in every meeting I say, ‘Make it easy.’ It’s kind of obvious, but it’s also easy to miss.”7

In the language of economics, the group is said to display behavior that is dynamically inconsistent. Initially people prefer A to B, but they later choose B over A. We can see dynamic inconsistency in many places. On Saturday morning people might say that they prefer exercising to watching television, but once the afternoon comes, they are on the couch at home watching the football game. How can such behavior be understood? Two factors must be introduced in order to understand the cashew phenomenon: temptation and mindlessness. Human beings have been aware of the concept of temptation at least since the time of Adam and Eve, but for purposes of understanding the value of nudges, that concept needs elaboration. What does it mean for something to be “tempting”?

Singer, and Jones (1965) on the campus of Yale University. The subjects were Yale seniors who were given some persuasive education about the risks of tetanus and the importance of going to the health center to receive an inoculation. Most of the students were convinced by the lecture and said that they planned to go get the shot, but these good intentions did not lead to much action. Only 3 percent actually went and got the shot. Other subjects were given the same lecture but were also given a copy of a campus map with the location of the health center circled. They were then asked to look at their weekly schedules, make a plan for when they would go and get the shot, and look at the map and decide what route they would take. With these nudges, 28 percent of the students managed to show up and get their tetanus shot. Notice that this manipulation was very

Self-control problems can be illuminated by thinking about an individual as containing two semiautonomous selves, a far-sighted “Planner” and a myopic “Doer.” You can think of the Planner as speaking for your Reflective System, or the Mr. Spock lurking within you, and the Doer as heavily influenced by the Automatic System, or everyone’s Homer Simpson. The Planner is trying to promote your long-term welfare but must cope with the feelings, mischief, and strong will of the Doer, who is exposed to the temptations that come with arousal. Recent research in neuroeconomics (yes, there really is such a field) has found evidence consistent with this two-system conception of self-control. Some parts of the brain get tempted, and other parts are prepared to enable us to resist temptation by assessing how we should react to the temptation.1 Sometimes the two parts of the brain can be in severe conflict—a kind of battle that one or the other is bound to lose.

As good architects know, seemingly arbitrary decisions, such as where to locate the bathrooms, will have subtle influences on how the people who use the building interact. Every trip to the bathroom creates an opportunity to run into colleagues, for better or for worse. A good building is not merely attractive, it also works. As we shall see, small and apparently insignificant details can have major impacts on people's behaviour. A good rule of thumb is to assume that everything matters. In many cases, the power of these small details come from focusing the attention of users in a particular direction. A wonderful example of this principle comes from, of all places, the men's rooms at Schiphol airport in Amsterdam. There, the authorities etched the image of a black housefly into each urinal. It seems that men usually do not pay much attention to where they aim, which can create a bit of a mess. But if they see a target, attention, and therefore accuracy, are much increased. According to the man who came up with the idea, it works wonders... Etchings reduced spillage by 80%. The insight that everything matters can be both paralysing and empowering.

Life as an Enron employee was good. Prestwood’s annual salary rose steadily to sixty-five thousand dollars, with additional retirement benefits paid in Enron stock. When Houston Natural and Internorth had merged, all of Prestwood’s investments were automatically converted to Enron stock. He continued to set aside money in the company’s retirement fund, buying even more stock. Internally, the company relentlessly promoted employee stock ownership. Newsletters touted Enron’s growth as “simply stunning,” and Lay, at company events, urged employees to buy more stock. To Prestwood, it didn’t seem like a problem that his future was tied directly to Enron’s. Enron had committed to him, and he was showing his gratitude. “To me, this is the American way, loyalty to your employer,” he says. Prestwood was loyal to the bitter end. When he retired in 2000, he had accumulated 13,500 shares of Enron stock, worth $1.3 million at their peak. Then, at age sixty-eight, Prestwood suddenly lost his entire Enron nest egg. He now survives on a previous employer’s pension of $521 a month and a Social Security check of $1,294. “There aint no such thing as a dream anymore,” he says. He lives on a three-acre farm north of Houston willed to him as a baby in 1938 after his mother died. “I hadn’t planned much for the retirement. Wanted to go fishing, hunting. I was gonna travel a little.

On average, those who eat with one other person eat about 35 percent more than they do when they are alone; members of a group of four eat about 75 percent more; those in groups of seven or more eat 96 percent more.

Can subliminal advertising be seen as a form of libertarian paternalism? After all, it steers people’s choices, but it does not make their decisions for them. So do we embrace subliminal advertising—so long as it is in the interest of desirable ends? [C]ompare subliminal advertising to something just as cunning. If you want people to lose weight, one effective strategy is to put mirrors in the cafeteria. When people see themselves in the mirror, they may eat less if they are chubby. Is this okay? And if mirrors are acceptable, what about mirrors that are intentionally unflattering? Are such mirrors an acceptable strategy in the cafeteria? If so, what should we think about flattering mirrors in a fast food restaurant?

An especially good way to gain weight is to have dinner with other people.11 On average, those who eat with one other person eat about 35 percent more than they do when they are alone; members of a group of four eat about 75 percent more; those in groups of seven or more eat 96 percent more.*

No more than 25 percent of the guests at a university dinner party can come from the economics department without spoiling the conversation.

Thinking, Fast and Slow, mentioned above, and Dan Ariely’s Predictably Irrational. One of the handful of books that provides advice on making decisions better is Nudge by Richard Thaler and Cass Sunstein, which was written for “choice architects” in business and government who construct decision systems such as retirement plans or organ-donation policies. It has been used to improve government policies in the United States, Great Britain, and other countries.

Learning is most likely if people get immediate, clear feedback after each try.

A bat and ball cost $1.10 in total. The bat costs $1.00 more than the ball. How much does the ball cost? _______ cents If it takes 5 machines 5 minutes to make 5 widgets, how long would it take 100 machines to make 100 widgets? _______ minutes In a lake, there is a patch of lily pads. Every day, the patch doubles in size. If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half of the lake? _______ days

Alert to the possibility of changing behavior by emphasizing the statistical reality, many public officials have tried to nudge people in better directions. Montana, for example, has adopted a large-scale educational campaign, one that has stressed the fact that strong majorities of citizens of Montana do not drink.18 One advertisement attempts to correct misperceived norms on college campuses by asserting, “Most (81 percent) of Montana college students have four or fewer alcoholic drinks each week.” Montana applies the same approach to cigarette smoking with an advertisement suggesting that “Most (70 percent) of Montana teens are tobacco free.” The strategy has produced big improvements in the accuracy of social perceptions and also statistically significant decreases in smoking.

1.​கல் மேல் நடந்த காலம் – சு. தியோடர் பாஸ்கரன் 2.​அக்னிச் சிறகுகள் – அப்துல் கலாம் 3.​தென்னாப்பிரிக்காவில் காந்தி 4.​Rich Dad Poor Dad – Robert Kiyosaki 5.​The Art of War - Sunzi 6.​Steal Like an Artist - Austin Kleon 7.​என் இளமைக்கால நினைவுகள் - ஓஷோ 8.​புதுமைப்பித்தன் சிறுகதைகள் 9.​ஜெயகாந்தன் சிறுகதைகள் 10.​அசோகமித்திரன் சிறுகதைகள் 11.​ஓலைப்பட்டாசு சிறுகதைத் தொகுதி, கற்றதும் பெற்றதும் – சுஜாதா 12.​புயலிலே ஒரு தோணி, கடலுக்கு அப்பால் – ப. சிங்காரம் நாவல்கள் 13.​Ogilvy David Advertising Books 14.​இன்றைய காந்தி, சங்கச் சித்திரங்கள், இந்து ஞான மரபில் ஆறு தரிசனங்கள், அறம் சிறுகதைத் தொகுப்பு – ஜெயமோகன் 15.​திருடன் மணியன்பிள்ளை - ஜி. ஆர். இந்துகோபன் 16.​சு. தியோடர் பாஸ்கரனின் சூழியல் நூல்கள் 17.​அன்னா கரினீனா, போரும் வாழ்வும் – லியோ டால்ஸ்டாய் 18.​குற்றமும் தண்டனையும், அசடன் – பியோதர் தஸ்தாயெவ்ஸ்கி 19.​The Magic Mountain – Thomas Mann 20.​ரேமண்ட் கார்வர் கதைகள் 21.​ஆண்டன் செகாவ் கதைகள் 22.​என் சரித்திரம் – உ. வே. சாமிநாதய்யர் 23.​The 7 Habits of Highly Effective People – Stephen R. Covey 24.​Nudge – Richard Thaler 25.​மூதாதையரைத் தேடி - சு.கி.ஜெயகரன் 26.​இந்திய வரலாறு: காந்திக்குப் பிறகு – ராமச்சந்திர குஹா 27.​எமதுள்ளம் சுடர் விடுக – பிரபஞ்சன் 28.​தேசாந்திரி – எஸ். ராமகிருஷ்ணன் 29.​ஆழமான கேள்விகள் அறிவார்ந்த பதில்கள் – ஸ்டீபன் ஹாக்கிங் 30.​உருவாகி வரும் உள்ளம் - விளையனூர் எஸ். ராமச்சந்திரன் 31.​சேப்பியன்ஸ் - யுவால் நோவா ஹராரி 32.​ஹோமோடியஸ் - யுவால் நோவா ஹராரி 33.​கோபல்ல கிராமம் – கி. ராஜநாராயணன் 34.​அ. முத்துலிங்கம் சிறுகதைகள் & வியத்தலும் இலமே 35.​சோஃபியின் உலகம் - யொஸ்டைன் கார்டேர் 36.​வந்தார்கள் வென்றார்கள் – மதன் 37.​குருதிப்புனல் – இந்திரா பார்த்தசாரதி 38.​இந்தியப் பயணங்கள் – ஏ. கே. செட்டியார் 39.​காலை எழுந்தவுடன் தவளை – பிரையன் டிரேசி 40.​சுதந்திரத்தின் நிறம் – லாரா கோப்பா 41.​கொங்குதேர் வாழ்க்கை – 2 (நவீன தமிழ்க் கவிதைகளின் தொகுப்பு) 42.​மோக முள் – தி.ஜானகிராமன் 43.​பொன்னியின் செல்வன் – கல்கி 44.​எட்டுத் திக்கும் மதயானை, கம்பனின் அம்பறாத்தூணி – நாஞ்சில்நாடன் 45.​புளியமரத்தின் கதை – சுந்தர ராமசாமி 46.​சிலப்பதிகாரம் 47.​காவல் கோட்டம் – சு. வெங்கடேசன் 48.​வேலையைக் காதலி – ஆர். கார்த்திகேயன் 49.​அப்பம் வடை தயிர் சாதம் – பாலகுமாரன் 50.​யேசு கதைகள் – பால் ஸக்காரியா நீங்கள் வாசிப்பிலும் வாழ்க்கையிலும் உயர என் நெஞ்சார்ந்த வாழ்த்துக்கள்! [1] நூல்: புன்னகைக்கும் பிரபஞ்சம். மொழிபெயர்ப்பு: செங்கதிர்

the planning fallacy—the systematic tendency toward unrealistic optimism about the time it takes to complete projects.

We are not sure that this particular trap has a name, but it is familiar to everyone. Let’s call it the “while we are at it” bias. Home improvement projects are often settings where this bias is observed. A family decides that after twenty years of neglect, the kitchen really needs to be upgraded. The initial to-do list includes new appliances and cabinets, but of course, the floor will be ruined during the construction, so we’d better replace that, and gosh, if we just pushed that wall out a bit, we could add a new window, which looks out on the patio, but oh dear, who wants to look at that patio . . . In the military this is called mission creep. Here we plead guilty to book revision creep. The revision that we planned to knock off during the summer was not given to the publisher until late November.

If you want to encourage people to do something, Make It Easy.

King C. Gillette, the founder of the razor company bearing his name, is said to have invented the marketing strategy of giving away the razor and making the money on the blades. The idea is that if the razor is essentially free and you get customers into the habit of buying blades from Gillette, then the company will be able to charge a higher price for the blades. The model seems to have worked: Gillette still sells a substantial percentage of the razor blades in the United States, and its blades are found all around the world. We don’t find anything especially troubling about the razor example (the cost of switching is pretty low), but the same model is used in several markets with higher stakes, such as inkjet printers. The strategy here: sell the printer cheap and make the money on the ink.

conducted by the UK’s Behavioural Insights Team. The goal of the experiment was to see whether taxpayers who owed money could be nudged to pay off their debts more quickly. The results were analyzed by team member Michael Hallsworth in collaboration with three academic economists. The subjects (who did not know they were part of an experiment) were taxpayers, such as business owners, who had income that was not subject to the withholding tax and had not paid in full. Several different letters were tried and compared to a control letter just reminding people of how much money they owed.

California and New York now require that any subscription that is initiated online can also be canceled online.

app we particularly like is called Tally.13 (Full disclosure: Tally was started by Jason Brown, who, when he was a student at the University of Chicago Booth School of Business, took Thaler’s class. We have no financial stake in his company.)

Hardin in a famous article published in 1968, the concept has been well known by social scientists for much longer.4 In economics, Paul Samuelson, a giant in the field, wrote about what he called

When your neighbor tells you that you can’t lose money buying (fill in the blank here) that is probably a good sign that it is time to get out of that type of investment.

Choice architecture in domains from human resource departments to social security to health care must use some combination of curation and navigation tools. If they don’t, people will flounder. As we have mentioned, some people have a simple philosophy: Just Maximize Choices. That’s not always a bad idea, but it can be problematic without sophisticated choice architecture tools. Instead, a well-curated small selection and/or a good default can produce quite satisfactory outcomes.

Instead of calls to action, the most innovative user experiences may be calls to inaction. (Design of default options is exceedingly important and superbly discussed in Richard Thaler and Cass Sunstein’s excellent Nudge.21) Web usability guru Steve Krug provocatively articulates this design sensibility in his heuristic, “Don’t Make Me Think.” Often the best way to get customers to appreciate an innovation experience is by not making demands on them. Don’t get in the way by offering to help. Engagement sometimes undermines a quality user experience. Eliminating choice frequently proves to be the best possible design choice. Because customers often prefer “mindless choices,” says Krug, minimalism is a virtue.

Life as an Enron employee was good. Prestwood’s annual salary rose steadily to sixty-five thousand dollars, with additional retirement benefits paid in Enron stock. When Houston Natural and Internorth had merged, all of Prestwood’s investments were automatically converted to Enron stock. He continued to set aside money in the company’s retirement fund, buying even more stock. Internally, the company relentlessly promoted employee stock ownership. Newsletters touted Enron’s growth as “simply stunning,” and Lay, at company events, urged employees to buy more stock. To Prestwood, it didn’t seem like a problem that his future was tied directly to Enron’s. Enron had committed to him, and he was showing his gratitude. “To me, this is the American way, loyalty to your employer,” he says. Prestwood was loyal to the bitter end. When he retired in 2000, he had accumulated 13,500 shares of Enron stock, worth $1.3 million at their peak. Then, at age sixty-eight, Prestwood suddenly lost his entire Enron nest egg. He now survives on a previous employer’s pension of $521 a month and a Social Security check of $1,294. “There aint no such thing as a dream anymore,” he says. He lives on a three-acre farm north of Houston willed to him as a baby in 1938 after his mother died. “I hadn’t planned much for the retirement. Wanted to go fishing, hunting. I was gonna travel a little.” Now he’ll sell his family’s land. Has to, he says. He is still paying off his mortgage.7 In some respects, Prestwood’s case is not unusual. Often people do not diversify at all, and sometimes employees invest a lot of their money in their employer’s stock. Amazing but true: five million Americans have more than 60 percent of their retirement savings in company stock.8 This concentration is risky on two counts. First, a single security is much riskier than the portfolios offered by mutual funds. Second, as employees of Enron and WorldCom discovered the hard way, workers risk losing both their jobs and the bulk of their retirement savings all at once.

It is usually good to provide people with lots of options, but when the question is complicated, sensible choice architecture guides people in the right directions.

By properly deploying both incentives and nudges, we can improve our ability to improve people’s lives, and help solve many of society’s major problems. And we can do so while still insisting on everyone’s freedom to choose.

Drawing on some well-established findings in social science, we show that in many cases, individuals make pretty bad decisions—decisions they would not have made if they had paid full attention and possessed complete information, unlimited cognitive abilities, and complete self-control.

In many contexts defaults have some extra nudging power because consumers may feel, rightly or wrongly, that default options come with an implicit endorsement from the default setter, be it the employer, government, or TV scheduler. For this and other reasons, setting the best possible defaults will be a theme we explore often in the course of this book.

A third positive result even further from the traditional tool kit of financial incentives comes from a recent randomized control trial conducted in the U.K., using the increasingly popular and low-cost method of text reminders. This intervention involved sending texts to half the parents in some school in advance of a major math test to let them know that their child had a test coming up in five days, then in three days, then in one day. The researchers call this approach “pre-informing.” The other half of parents did not receive the texts. The pre-informing texts increased student performance on the math test by the equivalent of one additional month of schooling, and students in the bottom quartile benefited most. These children gained the equivalent of two additional months of schooling, relative to the control group. Afterward, both parents and students said they wanted to stick with the program, showing that they appreciated being nudged.

The academic effort of college students is influenced by their peers, so much so that the random assignments of first-year students to dormitories or roommates can have big consequences for their grades and hence on their future prospects. (Maybe parents should worry less about which college their kids go to and more about which roommate they get.)

We will not be able to protect against future crises if we rail against greed, corruption, and wrongdoing without looking in the mirror and understanding the potentially devastating effects of bounded rationality, self-control problems, and social influences.

The three social influences that we have emphasized—information, peer pressure, and priming—can easily be enlisted by private and public nudgers. As we will see, both business and governments can use the power of social influence to promote many good (and bad) causes.

When people have a hard time predicting how their choices will end up affecting their lives, they have less to gain by numerous options and perhaps even by choosing for themselves. A nudge might be welcomed.

It is particularly hard for people to make good decisions when they have trouble translating the choices they face into the experiences they will have.

Two of the best restaurants in Chicago (Alinea and Charlie Trotter’s) give their diners the fewest choices. At Alinea diners just decide whether they want fifteen very small plates or twenty-five tiny ones. At Charlie Trotter’s, the diner is asked only whether to limit the dining to vegetables or not. (In both, one is asked about dietary restrictions and allergies.) The benefit of having so little choice is that the chef is authorized to cook you things you would never have thought to order.

Unfortunately, some of life’s most important decisions do not come with many opportunities to practice. Most students choose a college only once. Outside of Hollywood, most of us choose a spouse, well, not more than two or three times. Few of us get to try many different careers.

Generally, the higher the stakes, the less often we are able to practice.

Self-control issues are most likely to arise when choices and their consequences are separated in time.

there is no question that social pressures nudge people to accept some pretty odd conclusions—and those conclusions might well affect their behavior.

Often we can do more to facilitate good behavior by removing some small obstacle than by trying to shove people in a certain direction.