Christine L. Exley and Judd B. Kessler, “Information Avoidance and Image Concerns.” NBER Working Paper 28376, January 2021 (revised May 2021).- Contrary to what a standard economic view would suggest, people often avoid receiving information that is pertinent and seemingly free. A plethora of potential reasons can be offered as explanations for information avoidance.
- People want to think well of themselves, so they might like to muddy the waters around selfish acts, by remaining ignorant (thereby possessing plausible deniability) of the actual extent of their selfishness. This article asks how much information avoidance is driven by concerns with maintaining one’s self-image.
- More specifically, people often avoid learning about how their choices affect the outcomes for other people – even if the information would not affect their decision. When I intend to act selfishly, I might not want to know how much others are harmed by my choice. The opportunity to avoid information about harms to others promotes more selfish behavior.
- The approach here is to look at information avoidance with respect to two decisions that differ only in that one decision has no prospect of involving a selfish motive (as the chooser's own payoff is not implicated in the decision).
- A person is asked to choose either option A or option B. The "Self/Other condition" is one in which the chooser will receive a higher payoff from A than for B. Their choice between A or B, however, will also affect the payoff of someone else ("Other"), and it is possible that the other person will receive a much higher payoff with B. At the start, the chooser does no know what option is best for the other person, but does know that A is best for the chooser him or her self. The chooser (sometimes) has the option of just making the choice between A or B, or, learning the Other's payoffs associated with A or B. Will the chooser seek to learn this information?
- If Self and Other turn out to both do better with A, that is termed the "aligned" state; if it turns out that Other prefers option B, that is the "unaligned" state, the preferences of the two folks do not match. (So choosing to get the info means that the chooser learns whether the preferences are aligned or unaligned – if they are aligned, then there is no conflict, the selfish choice is also good for the Other.)
- In the Other/Other condition, alternatively, the chooser is again making a choice in the Self/Other circumstances, except what used to be the chooser's payoffs now go to someone else, a third party – the chooser has no skin in the game, no selfish interest, but the interests of the two Others might conflict. Will the chooser elect to learn whether the interest are aligned or unaligned?
- Four studies, overall n > 4,600.
- In Self/Other, if choosers know (no choice) the info and it is unaligned, about 1/3 make the selfish choice. If the state information is not revealed unless requested, 2/3 of subjects in Self/Other choose not to acquire the information. If the choosers elect not to know, more than half choose the selfish option. That is, people who avoid the info behave in a more selfish way, on average, than if their choice fully revealed their selfishness because of their knowledge of unalignment.
- In the Other/Other condition, where there is no selfish option, information avoidance falls – but only by about 20%; that is, more than half the participants still choose to avoid the information.
- The Other/Other results suggest that most of the information avoidance is not about self-image concerns, because there are no such concerns in the Other/Other condition.
- If you make info provision an active choice (as opposed to opt-in), information avoidance falls by about half: it sort of seems like participants just aren’t paying much attention without the need to make an active choice?
Philip W.S. Newall, Lukasz Walasek, Arman Hassanniakalager, et al., “Statistical Risk Warnings in Gambling.” Behavioural Public Policy 7(2), 219-239, 2023 [pdf available here].- Warning messages in the gambling arena, when they are provided, tend to be generic and do not facilitate comparison across various betting options.
- Theoretical loss = (house edge) times (total amount bet), or, the expected price of a bet or bets; for instance, in European roulette, the house edge is 2.7%, so the theoretical loss of betting $100 is $2.70.
- Theoretical loss is a long-run concept and not salient for bettors, while their recent gambling experience is quite salient. But given that most of the social harm from gambling is tied to bettor losses, theoretical loss is a decent metric for the social risks of alternative wagers.
- Expected prices (or theoretical loss) of gambling tends to be hidden from gamblers – but it would be possible to provide (sometimes approximate) theoretical loss information, or other related metrics such as house edge. (For games where player behavior affects the odds, the risk could even be personalized based on player characteristics.) Presumably gamblers (all else equal) would be dissuaded from forms of gambling with high theoretical losses.
- Should gambling warnings also note volatility and the slow convergence to theoretical loss levels?
- Gamblers cannot identify vast differences in expected price on seemingly identical games.
- Some jurisdictions mandate “return to player”-style info; but players often do not understand it. And sometimes the info is hard to find and to see.
- Should the automatic reinvestment of small wins into a player's available gambling account be banned?
- In sports betting, longshots and “exact score” or other prop bets tend to have higher house edges – and these are heavily advertised.
Patrik Michaelsen, Lars-Olof Johansson, and Martin Hedesström, “Experiencing Default Nudges: Autonomy, Manipulation, and Choice-Satisfaction as Judged by People Themselves.” Behavioural Public Policy,
First View, 1–22, 19 March 2021. - This article examines how people feel about default nudges, especially with respect to their perception of their autonomy and their satisfaction with their ultimate choice. "We present three experiments (total N = 2083) where participants are subjected to opt-out default nudges and compared with participants subjected to opt-in or a no-default active-choice format [pages 3 and 4]."
- Study 1: MTurk folks consider whether to have “green” (and slightly more expensive) appliances in their (imaginary) new flats. There are three conditions: green (environmentally friendly) default (opt out); non-green default (opt-in); and active choice.
- The effect of the default is big, with about twice as many green appliances chosen with opt-out relative to opt-in; active choice leads to more green appliances than opt-in, too, but not as much more as opt-out.
- Participant ratings of their autonomy, satisfaction, and perceived threat to their choice freedom do not differ based on the condition. In particular, the opt-out default, which produces greener choices, does not lead to participant dissatisfaction.
- Study 2 replicates study 1, but with a twist: now, half of the participants ae told about the default or active choice, and how default nudges are expected to influence choices. How does making the nudge transparent affect its influence on choices and satisfaction?
- It turns out that lots of participants don’t really understand the explanation of how the default nudge is supposed to work.
- The large impact on choosing green appliances from the opt-out default is replicated – and nudge transparency does not change that.
- The participants give high ratings across-the-board for autonomy, but opt-out folks report slightly higher experienced autonomy and satisfaction than do their opt-in brethren.
- Study 3 aims to raise the stakes (slightly). Participants receive a 20 cent bonus, on top of the 50 cents they are paid to take part. But they are given an opportunity to donate their bonus to a charity. The opt-out condition is where the bonus is defaulted to the charitable contribution.
- Defaults continue to have consequences: opt-out folks are more likely to donate than are opt-in; active choice is in the middle; the three conditions have no effect on feelings of autonomy.
- With disclosure (and understanding), opt-in and active choice donations go up. (Again, the number of participants who do not understand the disclosure is fairly staggering.)
- Opt-out folks view the set-up as more threatening to freedom of choice, and full transparency raises everyone's view of such a threat – but despite that threat, people aren't really worked up over it.
Denise de Ridder, Floor Kroese, and Laurens van Gestel, “Nudgeability: Mapping Conditions of Susceptibility to Nudge Influence.” Perspectives on Psychological Science 17(2): 346–359, 2022.- What conditions might influence the extent to which people are susceptible to a nudge? The authors look (primarily) at three issues: (1) awareness of the nudge and/or its purpose; (2) pre-existing preferences; and, (3) are the subjects employing System 1 or System 2 thinking?
- In this article, transparency involves making subjects aware of the presence and purpose of a nudge; this is a stricter condition than Thaler and Sunstein’s publicity principle, that asks if nudges, were they publicly known, would garner public support.
- Default nudges tend to maintain their effectiveness under transparent conditions; further, when nudged opaquely, people informed after the fact don’t seem to view those nudges as an affront to their autonomy. (Though when an ex ante inquiry is made, people often indicate that they will feel their autonomy threatened by an opaque nudge; that is, they forecast a higher level of concern than they will actually experience.)
- Nudges will be “ineffective” at altering choices if the nudge counsels behavior to which they hold a negative view, or if the nudge counsels behavior to which they already are strongly attached! That is, we needn't be too concerned with nudging people into behaviors that their pre-existing preferences do not endorse.
- If people lack clear preferences, a nudge might “impose” preferences – though starting with a request that people discuss their preferences (a plus!) might undermine any perceived manipulation.
- There is not much evidence suggesting that people are nudged more when they are employing System 1 thinking (through ego depletion, say). That is, the effectiveness of a nudge is not tied to the extent that it prompts unthinking responses.
- People with lower cognitive capacity do not appear to be more susceptible to nudges.
- The final sentence of the text succinctly summarizes the article: "Nudges do allow people to act in line with their overall preferences, nudges allow for making autonomous decisions insofar as nudge effects do not depend on being in a System 1 mode of thinking, and making the nudge transparent does not compromise nudge effects [p. 355]."
Weijia (Daisy) Dai and Michael Luca, “Digitizing Disclosure: The Case of Restaurant Hygiene Scores.” Harvard Business School, Working Paper 18-088, 2018 [pdf of 2019 version here].
• San Francisco does not mandate that restaurants post their hygiene scores – which are public information generated by unannounced inspections – but is willing to facilitate the posting of the scores on Yelp. (The scores already are available on the City's Department of Public Health website -- but people don't usually go there to order food online!) The (common) reluctance to require disclosure by the restaurants themselves might draw in part from restaurant industry opposition.
• Two interventions are examined: (1) Yelp posts the hygiene scores on its restaurant webpages; and (2) Yelp makes low scores salient via a “hygiene alert” box (which covers the customer reviews part of the Yelp listing)
• A “Poor” restaurant hygiene score (70 or below) results from multiple high-risk violations
• The hygiene alert box informs the webpage visitor that food safety is the point of the hygiene score, and that the score is based on government inspection; further, the alert reveals that the restaurant received a Poor rating in its most recent review, which puts it in the bottom 5% of hygiene ratings.
• Prior to the Yelp interventions, less hygienic restaurants see slightly lower consumer purchasing intentions than do their more hygienic counterparts. Those purchasing intentions are measured via Yelp page visits, “leads,” and the number of Yelp reviews. A "lead" is tallied through various behaviors by online shoppers, such as calling the restaurant, seeking directions to the restaurant, or checking out the restaurant's own webpage (as opposed to its Yelp listing).
• Leads and Yelp reviews respond in the expected direction to Yelp posting of the hygiene scores; Yelp (star) ratings do not
• “Poor” restaurants see a 12% decline in leads compared to the non-Poor
• The salience intervention enhances the posting effect: take-out orders for Poor restaurants fall 12.8%. That is, how information is disclosed seems to matter, along with the disclosure itself.
• Poor restaurants seem to be (somewhat) motivated to clean up their act after Yelp posts the alert
Oren Bar-Gill, David Schkade, and Cass R. Sunstein, “Drawing False Inferences from Mandated Disclosures.” Behavioural Public Policy, published online 15 February 2018.
• When the government mandates that sellers (of food products, say) reveal some information to potential purchasers, the message that the consumers take away from the disclosure might not be what the government intended to convey.
• The perceived motivation(s) behind the government's requirement could affect consumer responses. Some mandates are aimed to convey a verified health risk; others might satisfy a somewhat nebulous consumer "right to know," even if no health risk is involved. Interest group pressures or social values of some sort (e.g., supporting domestic employment) are other motivations for disclosure mandates.
• People are more disposed to be influenced by the information relayed in a mandated disclosure if they believe the motive behind the mandate is new research findings (as opposed to political pressures). Problems arise when consumers are misled by mandated
information; such misleading is likely when consumers misperceive the
motives behind the mandate.
• The Bar-Gill, Schkade, and Sunstein article itself seems motivated by proposed and sometimes enacted government mandates that require firsm that sell foods including GMOs to indicate that fact. The potential issue is that there seems to be no evidence that GMO-containing foods possess higher health risks than do other foods; nonetheless, the mandated information could lead consumers to believe that GMOs are known to be unsafe.
• The authors’ Mturk survey (n=1675) concerns either GMOs or a fictitious synthetic food preservative, Z25.
• The government could: (1) let voluntary disclosure do all the work (that is, take no action); (2) mandate disclosure; or (3) mandate a warning. Government motives are either: (1) right-to-know; (2) political pressure; or (3) new research.
• After learning the government action, some subjects are told the government motive, while others are asked what they think the motive is.
• Subjects rate perceived risk (ex post and, for GMOs, ex ante, too) on a 0 to 100 scale, and indicate their intentions to purchase.
• False inferences may be a problem: posterior risk changes as much from new research as from right-to-know motivations; perhaps consumers do not trust that right-to-know motives are pure.
• A political pressure motive seems to lower the perceived risk of GMOs after disclosure (relative to no action).
• Subjects with strong prior beliefs about GMOs do not appreciably alter their beliefs based on government actions and motives.
• Can counter-advertising fix the false inference problem?
Cass R. Sunstein, “’Better Off, as Judged by Themselves’: A Comment on Evaluating Nudges.” International Review of Economics 65(1): 1-8, March 2018.
[Round 1 here; Round 3 here]
• In trying to improve wellbeing, individuals’ judgments of their own welfare are a central metric.
This metric is complicated, however, if people have different judgments before and after a nudge, say.
• Sugden argues that two potential interpretations of “as judged by themselves” (AJBT) are flawed, one by applying only to relatively rare self-control issues, and the second by allowing individual preferences to be sacrificed to the whims of nudgers.
• Sugden's title asks if people really want to be nudged towards healthier living. The empirical answer is “yes.”
• AJBT is not our method to rule out charges of paternalism, but rather, to limit the coercive element of paternalistic acts – like a GPS, we want to improve “navigability,” so people can better serve their own interests. Nudges are about means, not ends.
• Reminders (such as text messages) serve people’s pre-nudge preferences -- likewise with information provision, as with calorie counts.
Other nudges can change behaviors in a manner that the nudged individual endorses after-the-fact, but not before, such as a mechanism to dissuade texting while driving.
• With self-control problems (akrasia), nudges might help to bolster Dr. Jekyll (planner) at Mr. Hyde’s (doer) expense.
Sunstein asked folks online if they had a self-control problem: the majority said yes. And programs to ends addictions are quite popular.
• Yes, preferences can be formed in the process of elicitation; for instance, people might stick with, and endorse, any of various default settings. Then nudgers are forming preferences, but AJBT limits what nudgers can do.
• To summarize, some nudges serve ex ante preferences when they increase navigability; some help with (widespread!) self-control shortcomings; and some contribute to preference formation, but in a manner that still respects after-the-fact preferences.
George Loewenstein and Nick Chater, “Putting Nudges in Perspective.” Behavioural Public Policy 1(1): 26-53, 2017
• Nudging is popular, but perhaps its unintended consequences are worrisome; perhaps, for instance, nudges have crowded out better policies.
• The standard nudge involves a response to a problem that itself is a result of a behavioral issue, a rationality shortfall. But there is no reason that the best type of policy response – whether traditional, behavioral, or a hybrid – should match the condition that gives rise to the problem. Some rationality shortfalls might best be handled with taxes or regulations, not nudges…
• …though behavioral ideas can help package those taxes or regulations in ways that can maximize their impact.
• One important area of concern involves how to counter the nudging undertaken by profit-maximizing firms, often aimed at taking advantage of consumer rationality shortfalls.
• Many social problems can’t be explained by behavioral issues that should be roughly constant over time and in different areas. These problems perhaps require a structural response, not a nudge. The recent increase in obesity cannot really be due to an increase in present bias; nor will it be fixed by better placement of healthy products in stores.
• Don’t let nudges distract you from seeking more comprehensive solutions. Loewenstein and Chater go on to examine three policy areas from their "perspective."
• Smoking: externalities, internalities, and depredations by sellers all motivate policy responses. Those responses include high taxes, advertising and marketing controls, product placement controls, graphic warnings, public smoking bans – and the combination is effective.
• Obesity: internalities, budgetary externalities, and the behavior of those profit-motivated sellers provoke policy responses. The main response is of the “traditional economics” variety, information provision, and it is not very helpful for what is after all a structural problem, not a big change in behavioral biases or time discounting. Perhaps bans on non-linear pricing are called for?
• Retirement Savings: Internalities, and the behavior of firms like payday loan companies, exacerbate the extreme savings shortfalls that exist. Successful interventions have been behavioral, especially defaults and automatic escalation of savings. Tax breaks are not very helpful, but much more needs to be done.
• Consider big issues, such as inequality, climate change,and employment overhauls: all of these problems need traditional economic responses,and perhaps some hard paternalism – but there still are plenty of contributions that behavioral science can make.
Professor Thaler responds with “Much Ado About Nudging,” on the Behavioural Public Policy Blog, June 2, 2017
• No one really believes that nudges are a panacea. In Nudge, we just want to inform policy with behavioral insights.
• Likewise, everyone agrees that present bias is not the sole cause of obesity.
• Don’t undersell the cumulative impact of many small behavioral interventions, including when applied to big problems like climate change.
“My own approach to thinking about such problems is to conduct what I call a ‘choice architecture audit’, the goal of which is to find the most critical decisions various actors have to make, as well as the potential levers (behavioral and economic) that policy makers can use to improve outcomes.”
• There is much to be said for nudging (soft paternalism) over hard paternalism when it comes to dealing with internalities. Either type of policy will push some subset of people in an inappropriate direction: how hard do we want that push to be?
• We know bureaucrats are biased and often mistaken: do we want them to be hard or soft paternalists?
Cass R. Sunstein, “People Prefer System 2 Nudges (Kind Of),” July 19, 2016. Duke Law Journal, Vol. 66, 2016. [The outline here is based on an earlier version, that of February 19, 2016.]
• In Kahneman’s terminology, System 1 is the automatic, intuitive part of our decision making, whereas System 2 represents our more considered (though not necessarily better) thoughts.
• Some types of nudges, such as graphic labels on cigarette packages or the selection of defaults, tend to be aimed at affecting System 1 responses. Other nudges, such as the provision of better information on nutrition, engage with System 2. System 2 nudges help people “exercise their own agency [p. 5],” that is, make better considered decisions.
• Sunstein arranges for a survey to be administered to seven groups of Americans, with more than 400 people in each group; they are paid for their participation.
• The participants are presented with four issues -- savings, smoking, clean energy, water -- and two alternative approaches, one System 1 nudge and one System 2 nudge, for each of the issues. The majority tends to prefer System 2 nudges, but a sizeable minority feels the other way. Democrats seem slightly more likely than Republicans to support System 1 nudges.
• If told that the System 1 nudge is significantly more effective, about 12% of folks switch to preferring the System 1 nudge; precise quantitative evidence of superior effectiveness does not seem to increase any further the attractiveness of System 1 nudges. When folks are told that System 2 nudges are more effective, that information has no effect on overall preferences between the options.
• Sunstein also explores a second set of three, more ideologically charged issues: voter registration, childhood obesity, and abortion. For voter registration and anti-obesity, a majority favor System 1 nudges. For dissuading abortions, most people prefer System 2 nudges, even when System 1 (show fetus photos) is said to be more effective.
• Alternatively, some people like System 1 nudges, even when they are told that those nudges are less effective. It seems that when people feel strongly about an issue, they support System 1 nudges that push their side of the issue.
• Sunstein makes a meta-observation, that perhaps our brain's System 1 likes System 2 nudges, but sometimes System 2 overrides that preference. Note that often System 1 nudges are fairly easy to implement, such as by setting a default, for instance.
Saurabh Bhargava and George Loewenstein, “Behavioral Economics and
Public Policy 102: Beyond Nudging.” American Economic Review 105(5): 396-401, 2015.
• The early behavioral economics-influenced policy proposals were aimed at internalities, and at nudging decisions quite proximate to the perceived problem.
• The next stage, Bhargava and Loewenstein argue, should be to influence the design of policies that are more fundamental, but perhaps less proximate, to perceived problems. This approach need not be particularly controversial, given that the targeted problems often implicate externalities or other market failures.
• Successful nudges have included easing the way to save more for retirement, along with improving the disclosure of information so that people receive useful information in a manner that is easy to understand and respond to.
• Proposed principle #1: not only should choice environments be simplified, the objects of choice should be simplified. Financial products, for instance, could be required to be simple and to be presented in a standardized form.
• Proposed principle #2: policy should look to counter nudges by the private sector that are detrimental to consumers.
• Proposed principle # 3: traditional policy instruments, such as taxes, should be modified in a manner informed by behavioral considerations (framing, salience, inattention, etc.) to maximize the policies’ impacts.
• Examples that the authors discuss include health insurance (lots of room for simplification and standardization); privacy and disclosure (again, simplification and standardization, along with controls on misleading disclosures); and climate change (contending against the many psychological dispositions that make it hard to recognize or respond to this global public bad).
Meghan R. Busse, Nicola Lacetera, Devin G. Pope, Jorge Silva-Risso, and Justin R. Sydnor. “Estimating the Effect of Salience in Wholesale and Retail Car Markets.” American Economic Review 103(3): 575-79, 2013 [pdf].
• People have limited attention, and hence, even the provision of full information might not lead to “optimal” decision making.
• Retail prices for used cars show a significant discontinuity when the mileage on those cars passes from 9,999 to 10,000 miles; similar discontinuities exist at higher multiples of 10,000, too. Apparently buyers focus on the left-most digit of the mileage, and pay less than full heed to the other digits, so they overpay for a car with 69,950 miles on it, for instance. The overpayment is significant, on the order of $300.
• Car owners respond to this bias by trading in their cars at a higher rate before they reach milestones such as 50,000 miles. That is, left-digit bias affects not only prices of used cars, but also the composition of used cars offered for sale.
• Wholesale prices for used cars show similar price discontinuities at major milestones, but these seem largely to be reflecting the retail effects of left-digit inattention.
George Loewenstein, Daylian M. Cain, and Sunita Sah, “The Limits of Transparency: Pitfalls and Potential of Disclosing Conflicts of Interest.”
American Economic Review 101(3): 423–428, 2011 [pdf available here].
• Disclosure of conflicts of interest to customers would presumably eliminate any potential problems with such conflicts, if customers were standard rational actors.
• But how do people respond to mandated disclosures? Those providers who have conflicts might increase the bias in their advice, realizing that their advice will tend to be discounted. They might even feel that the disclosure provides them with a “moral license” to mislead.
• The recipients of the disclosure might think that the disclosure itself is a signal that the provider must be trustworthy. Further, they recognize that the rejection of the provider’s advice is now a sort of tacit accusation that the provider is corrupt – and people are wary of sending such signals. The desire to help out the provider might also push consumers to accept the conflicted advice.
• The authors describe some experiments in which mandatory disclosure of conflicts of interest did indeed lead to worse advice, and acceptance of worse advice, with degraded outcomes for consumers (relative to when conflicted advisors were not required to disclose their conflicts.)
• If the disclosures were not made by the provider, but by someone else, then consumers were better able to respond appropriately. It appears that it is when there is “common knowledge” of the conflict – the provider knows it, the consumer knows it, the provider knows that the consumer knows it, etc… – that the consumer’s incentive to go along with the biased advice is maximized. More time to respond to biased advice – a sort of cooling-off period – also is helpful to consumers.
• An in-depth follow-up article on disclosure previously received the BE Outlines treatment.
George Loewenstein, Cass R. Sunstein, and Russell Golman, “Disclosure: Psychology Changes Everything.” Annual Review of Economics 6: 391–419, 2014 (pdf).
• A good deal of information is disclosed through government mandate, and much of this information would not be disclosed in the absence of the mandate. The information would not be disclosed perhaps because it would not benefit sellers, or because information has a public good aspect that lowers the incentive for any single private entity to produce and disseminate the information.
• Mandated disclosures involve some subtle costs, such as the time they take for consumers to read them, the subsequent loss of attention to other pieces of information, and even the emotional costs associated with graphic warnings, for instance.
• Mandated disclosures tend to occur when there are significant gaps in the information known to sellers and that known to buyers, and when the informational disadvantage threatens the interests of consumers. Disclosure also can be used to help consumers overcome their own departures from rational decision making: perhaps “behavioral market failures” provide a rationale for policies to limit internalities.
• Some information – such as a physician’s assertion that a certain treatment is needed – is not verifiable, and hence problems connected with this information cannot be solved simply through disclosure. But physicians might be required to disclose their interests (such as receiving royalties from the recommended treatment) if those interests are not fully aligned with patient interests.
• Disclosure of conflicting incentives does not fix every problem. The disclosing agent might view the disclosure as allowing for carte blanche, for any sort of self-interested advice. The recipient (principal) might feel compelled to follow the advice, to avoid the inference that the advice giver is viewed as untrustworthy.
• The technology of disclosure – who makes it, when, and what effort is made to render it noticeable – helps to determine its impact.
• Sellers have little reason to put effort into those dimensions of a good that potential consumers do not pay attention to. A producer of a less deadly cigarette might not want to disclose its relative safety, because to do so might make the fatal consequences of smoking more salient.
• Warning labels don’t seem to accomplish much; more generally, see Omri Ben-Shahar and Carl E. Schneider, More Than You Wanted to Know: The Failure of Mandated Disclosure, Princeton U. P., 2014.
• The absence of information should best be met, perhaps, by assuming the worst, as otherwise the information would have been provided. But people often do not draw this inference, even when it is rational to do so. This presents a potential rationale for mandating disclosure.
• Sometimes we want to be ignorant, sometimes information can lower our utility – a tendency that motivated the May, 2015 on-air radio killing of a young rabbit in Denmark.
• The tell-tale heart effect: mandated disclosure might cause producers to up their game, even if no consumers pay attention. Revelation of calorie counts might lead to lower calorie offerings, even if consumers do not respond to the calorie information. Maybe producers suffer from a spotlight effect, a belief that people are observing their disclosures more closely than really is the case.
• Simplified information, like restaurant health grades, is often more valuable to consumers than is more finely grained information.
• Comparative information – how does my energy use stack up against my neighbors? – might be more influential on energy usage than other types of usage disclosures. But the potential for perverse outcomes exists, too.
• Personal policies for information disclosure or non-disclosure on social media, for example, do not seem to be fully rational.
Alberto Alemanno, “Nudging Healthier Lifestyles: Informing the Non-communicable Diseases Agenda with Behavioural Insights.” Chapter 14 in A. Alemanno and A. Garde, eds., Regulating Lifestyle Risks: The EU, Alcohol, Tobacco and Unhealthy Diets, Cambridge University Press, 2015.
• The European section of the World Health Organization has begun an initiative to combat “lifestyle” non-communicable diseases: those associated with tobacco, alcohol, and goods high in salt, sugar, and fat.
• Regulations that commonly are applied to lifestyle goods include mandatory information disclosure; marketing limitations; taxes and other devices to reduce availability.
• Behavioral economics-style nudges fit well with lifestyle issues. They tend to be low cost and preserve individual choice. Lifestyle nudges might include disclosure rules; default settings; and, simplification. For instance, the extremely graphic photos required on cigarette packs, and nutrition fact panels, are nudges of a sort.
• The European Union (oddly) is requiring that cigarette packs not disclose tar, nicotine, and carbon monoxide content. The rationale is that such information might lead smokers to think that some cigarettes are less harmful than others. (There is some evidence that consumers smoke low tar and nicotine cigarettes more intensely, undoing any relative health benefits.)
• Thaler and Sunstein’s “publicity principle” (borrowed from John Rawls, building on Kant) is that governmental nudges must be supportable if everyone is informed about them. If people will be upset if they were misled, even if the misleading resulted in better choices for them, then the misleading is wrong.
• Much of the evidence for nudges comes from the laboratory, and might not work in the real world. Or, a nudge might work at first, but then become less effective over time. Notice that marketing experts think that nudges work, however.
George Loewenstein, Cindy Bryce, David Hagmann, and Sachin Rajpal, “Warning: You are About to Be Nudged,” March 28, 2014
• Does informing people about the use of a behavioral nudge – here, default choices – alter their behavior relative to using the nudge without informing them?
• The experiment involves a hypothetical directive concerning end-of-life care. Subjects could choose the “Prolong” option, in which medical authorities do whatever is necessary to keep someone alive, despite the potential for more suffering, or subjects could choose the “Comfort” option, in which doctors would try to be make the patients comfortable, at some cost in terms of longevity. Subjects also could choose to deputize their relatives and doctors to make the choice for them at the appropriate time.
• Each subject was provided with a default option, either “Prolong” or “Comfort,” though it was easy to override the default. Most people preferred the “Comfort” alternative, and the default setting did not influence these preferences in the aggregate. Telling people in advance about the extraordinary staying power of defaults had no effect relative to telling them after their initial choice.
• Along with the general Prolong/Comfort option, there were questions concerning five specific medical interventions. Choices on whether to pursue these options showed a significant influence from the default settings, even when subjects were pre-informed that they were being “defaulted.” Some of the influence remained for the respondents who were post-informed that they had been defaulted, and were asked to choose again without a specified default.
• Pre-informing people of the default had little impact on diminishing the power of the default nudge; likewise, post-informing them of the default, and giving them the opportunity to choose again, did not diminish the power of the default. Nonetheless, these findings take place in an experimental context in which default pressures themselves are not large.
M. Ryan Calo, “Code, Nudge, or Notice?” University of Washington School
of Law Research Paper, February 7, 2013.
• Code (including physical and virtual architecture), nudges, and information disclosure (notice) can be alternatives to formal law. They can alter behavior, but they might not include the procedural safeguards, nor the transparency, that commonly accompany law. Some nudges, for instance, can be invisible and unknown to the public. Like placebos, they might even lose their effectiveness if they were known.
• Consider driving. Speed bumps are a type of “code; visual illusions like those lines on Lake Shore Drive are a type of nudge; and, “kids at play” signs are a species of notice.
• If code precludes violations, then the potentially beneficent role of civil disobedience is undermined. Code makes some types of legal activity impossible; for instance, some fair uses of copyrighted material are ruled out by Digital Rights Management techniques.
• Calo invokes a rather singular definition of “nudges,” such that they necessarily take advantage of decision-making biases (such as the status quo bias) to push people in a preferred (by whom?) direction. Code rebiases, as opposed to debiases.
• Does frequent nudging lead to infantilization?
• Notice works where informed decision making works (and informing works, too). Some scholars take a very negative view of mandated information disclosure, on the grounds that it is frequently ineffective and even counterproductive.
• Are extremely graphic cigarette warnings a case of information provision (notice), or nudge? The answer might determine the constitutionality of mandates for such warnings.
