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Nudges are low-cost, low impact, often clever interventions by government, businesses and other organizations to \u201calert, remind or mildly warn\u201d<\/b> people when they are making decisions.<\/b>[1]<\/a> <\/b> Nudges can be subtle\u2014sometimes too subtle\u2014techniques to get people to make decisions either better for them or for the organization doing the nudging. As consumers, employees, voters and humans we need to understand how nudges work to maintain control of our decisions and our destinies.<\/b><\/p>\n

Governments and some companies design nudges to improve people’s health, safety, finances, job performance and environmental footprint. Such interventions have been justified by the claim that, without them, people will tend to make decisions colored by cognitive biases<\/a>, behavioral weaknesses (e.g. procrastination and inattention) or noise<\/a> (distractions and inconsistencies), which they\u2014and society\u2014later regret. A ‘good’ nudge will be transparent, easy to opt-out of, good for our welfare and cost-effective based on hard evidence.<\/b>[2]<\/a> The policy of creating good nudges has been dubbed “Libertarian Paternalism<\/a>.”<\/p>\n

On the other hand, some organizations have also used nudges in advertising, e-commerce, social media campaigns, app design and more to increase profits, employee productivity and for other purposes, which may or may not contribute to the nudgee’s welfare. Such nudges may not be transparent or easy to opt-out of (TurboTax asks three times whether I wouldn’t really rather pay $45 for their audit defense product).<\/p>\n

Organizations create nudges by leveraging many of the same biases and weaknesses that can cause bad decisions in the first place.<\/b> They carefully engineer the choice architecture<\/a> and framing <\/a>of decisions that people face. This can include adjusting incentives (first month free!), setting defaults (opt-out vs. opt-in) and offering feedback (are you sure you want to cancel your subscription?). Here are some examples and the biases they exploit:<\/p>\n