Thursday, April 2, 2009

Nudge: decision architecture - LSE podcast review

Last year there was an earlier lecture by Richard Thaler about Nudge on the UChannel Podcast and I reviewed it in December. What struck me at the time was the technocratic nature of Nudge. Here I'll take a look at other aspects.

This time Richerd Thaler spoke at the London School of Economics (on the LSE Events podcast) and it was a different, evolved probably, lecture by now. There were fewer examples of nudges, but more of the idea that in decision-making people tend to be human and not optimizing calculating economists. The whole idea of nudge is to help people quickly make decisions optimizing requires, without going through all the calculations.

Thaler calls his model one of libertarian paternalism. It is libertarian in the sense that freedom of choice is maintained. Options should be open, but paternalistically, people are nudged towards the choice that is deemed better for them (or for society that is). Nudge offers an alternative for policymakers who want to influence people's behavior and usually seize legal methods, either through taxation, obligation or punishment. Thaler shows that simply by creating a decision architecture, you can effortlessly induce people to go for the best decisions, because those decisions are easier, they stand out or form the default or seem to be better as the decision makers are informed of relevant data such as the choices other people made. I wonder how radical this approach is to social science.

More LSE Events:
The EU and the Middle East,
The British Mandate in Palestine,
Iran Today,
Science and Religion,
The crisis.

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