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

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  • Reijula, Samuli
  • Kuorikoski, Jaakko
  • Ehrig, Timo
  • Katsikopoulos, Konstantinos
  • Sunder, Shyam

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.

Suggested Citation

  • Reijula, Samuli & Kuorikoski, Jaakko & Ehrig, Timo & Katsikopoulos, Konstantinos & Sunder, Shyam, 2018. "Nudge, Boost, or Design? Limitations of behaviorally informed policy under social interaction," SocArXiv zh3qw, Center for Open Science.
    • Handle: RePEc:osf:socarx:zh3qw
    DOI: 10.31219/osf.io/zh3qw
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    Cited by:

    1. Gary Bolton & Eugen Dimant & Ulrich Schmidt, 2018. "When a Nudge Backfires. Using Observation with Social and Economic Incentives to Promote Pro-Social Behavior," PPE Working Papers 0017, Philosophy, Politics and Economics, University of Pennsylvania.
    2. Cristina Bicchieri & Eugen Dimant, 2022. "Nudging with care: the risks and benefits of social information," Public Choice, Springer, vol. 191(3), pages 443-464, June.
    3. Bicchieri, Cristina & Dimant, Eugen & Xiao, Erte, 2021. "Deviant or wrong? The effects of norm information on the efficacy of punishment," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 209-235.
    4. Frans Folkvord & Cristiano Codagnone & Francesco Bogliacino & Giuseppe Veltri & Francisco Lupiañez-Villanueva & Andriy Ivchenko & George Gaskell, 2019. "Experimental evidence on measures to protect consumers of online gambling services," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 3(1), pages 20-29, March.
    5. Karola Bastini & Rudolf Kerschreiter & Maik Lachmann & Matthias Ziegler & Tim Sawert, 2024. "Encouraging Individual Contributions to Net-Zero Organizations: Effects of Behavioral Policy Interventions and Social Norms," Journal of Business Ethics, Springer, vol. 192(3), pages 543-560, July.
    6. Peth, Denise & Mußhoff, Oliver & Funke, Katja & Hirschauer, Norbert, 2018. "Nudging Farmers to Comply With Water Protection Rules – Experimental Evidence From Germany," Ecological Economics, Elsevier, vol. 152(C), pages 310-321.
    7. Carlos Andres Trujillo & Catalina Estrada-Mejia & Jose A Rosa, 2021. "Norm-focused nudges influence pro-environmental choices and moderate post-choice emotional responses," PLOS ONE, Public Library of Science, vol. 16(3), pages 1-23, March.
    8. Gary E. Bolton & Eugen Dimant & Ulrich Schmidt, 2020. "When a Nudge Backfires: Combining (Im)Plausible Deniability with Social and Economic Incentives to Promote Behavioral Change," CESifo Working Paper Series 8070, CESifo.
    9. Dalia Streimikiene, 2023. "Use of Nudges for Promotion of Sustainable Energy Consumption in Households," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 17(1), March.

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    More about this item

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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