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Helping people make better choices — Nudge Theory and Choice architecture

https://medium.com/10x-curiosity/helping-people-make-better-choices-nudge-theory-and-choice-architecture-431a3a40b688

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Helping people make better choices — Nudge Theory and Choice architecture
Economics 101 says humans are rational — at least at a collective level. We will buy and sell at a value that we can justify maximises our utility. Much of our economic theories stem from this core…

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The nudge theory

The nudge theory

Behavioral economists show that when humans make quick decisions under pressure, it is based mostly on intuition. They are unconsciously guided by biases and psychological fallacies.

The nudge theory suggests making subtle interventions to nudge people to make certain choices without restricting them. Putting the fruit at eye level counts as a nudge.

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A choice architect

The task of a choice architect is to organize the context in which people make decisions.

Changing the context in which people make choices can make desired behaviors easier to accept.

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Intuitive and reflective thinking

  • Intuitive and automatic: This kind of thinking is quick and feels instinctive. You duck when a ball is thrown at you unexpectedly.
  • Reflective and rational: This thinking is deliberate and self-conscious. You use this system when you have to decide which route to take for a trip.

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The need for nudge theory: the Japanese example

Japanese train stations use nudge theory.

  • Blue lights improve the mood of commuters and reduce suicide attempts.
  • The door closing jingle lighten the highly stressed peak hour commute.
  • A high-frequency tone at station entrances reduce teenage loitering as the 17kHz can only be heard by people under 25 years.

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Why people comply when they are nudged

Biases are hardwired and difficult to change. To change behavior, attention is not paid to countering the problematic thoughts, judgments, or predictions. Instead, it has been directed to changing the behavior in the form of incentives or "nudges."

xample, employers have been able to nudge employees into contributing to retirement plans by making saving the default option; you have to actively take steps to not participate. _

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Optimize for defaultsShift your environment so that the good behaviors are easier and the bad behaviors are harder.

Optimize for defaultsShift your environment so that the good behaviors are easier and the bad behaviors are harder.

Default decisions and their influence

Although we usually have the freedom to make a wide range of choices at any given moment, we often make decisions based on the environment we find ourselves in:

  • If you sleep with your phone next to your bed, then checking social media and email as soon as you wake up is likely to be the default decision.
  • If you keep a water bottle with you throughout the day, then drinking water rather than soda is more likely to be the default decision.

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Default choices

Default choices

90% of your daily decisions happen automatically, many shaped by your environment. Thus, most decisions are a habit, not a deliberate choice.

To make smarter choices, design smarter...

Designing your life

Design your life like a choice architect:

  • Encourage smarter decisions you want to do by making them more accessible.
  • Add friction to habits you want to quit, making them less accessible, or remove the option to perform them completely.

Richard Thaler

Richard Thaler

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

Goal setting

Goal setting

Is the act of selecting a target or objective you wish to achieve.

Goal setting is not only about choosing the rewards you want to enjoy, but also the costs you are willing to pay t...

The Rudders and Oars Metaphor

It helps clarify the difference between SYSTEMS and GOALS:
  • Your goals are like the rudder on a small rowboat. They set the direction and determine where you go. 
  • If you commit to one goal, then the rudder stays put and you continue moving forward. 
  • If you flip-flop between goals, then the rudder moves all around and it is easy to find yourself rowing in circles.
  • If the rudder is your goal, then the oars are your process for achieving it. While the rudder determines your direction, it is the oars that determine your progress.

Example: If you’re a writer, your goal is to write a book. Your system is the writing schedule that you follow each week.

How to Set Goals You'll Actually Follow

  1. Ruthlessly Eliminate Your Goals. Consistently prune and trim down your goals. If you can muster the courage to prune away a few of your goals, then you create the space you need for the remaining goals to fully blossom.
  2. Stack Your Goals. Make a specific plan for when, where and how you will perform this."Networking: After I return from my lunch break, I will send one email to someone I want to meet."
  3. Set an Upper Bound. Don't focus on the minimum threshold. Instead of saying,  “I want to make at least 10 sales calls today.” rather say, “I want to make at least 10 sales calls today, but not more than 20.”