Nudges and boosts as policy instruments - understanding behavioral interventions
Short description
Around the world, behavioral interventions, such as nudges, have gained a huge interest and special “nudge units” tailor interventions that encourage the “right” behavior by less intrusive measures than taxes or regulations. In spite of the practical popularity, we still know very little about what mechanisms make nudges work in some cases but not in others. This project will increase our understanding in this respect. It consists of several theoretical and empirical studies that are strongly linked together. We will not only study nudges, but also the less known ‘boost’. While a nudge affects an inattentive choice, a boost facilitates making an attentive (rational) choice.
This research program aims at increasing our understanding of behavioral interventions, both from a positive and from a normative perspective. Our aim is to give a significant theoretical contribution to the literature on behavioral interventions, which to date is a very empirical literature. Nudges are the most well-known of the behavioral interventions. They change the choice architecture to steer people’s choices without limiting or distorting the choice situation through taxes, bans or other intrusive measures. Making one option the default without prohibiting other options or reminding of a social norm are all examples of nudges. If individuals optimize in a purely neoclassical way, they would not be affected by nudges. The reason why they work is that people tend to base many choices on heuristics rather than on optimization.
Exploring the mechanisms of nudges
There are numerous empirical studies evaluating behavioral effects from different nudges. However, we still know too little about the underlying mechanisms that explain why a certain nudge seems to work in one context but not in another. This project aims at increasing our understanding in this respect.
Nudges have been criticized for being manipulative as they make use of the fact that people do not make rational and well-informed decisions. In this project we will also analyze the less well-known intervention called boost, that lowers the cognitive cost of a rational choice, making it more likely.
Theoretical work and field experiments
This research program wants to take a broad grip on behavioral interventions such as nudges and boosts. Very little research has so far been conducted on boosts, but they are likely to become more frequently used in the future. We will conduct both positive and normative theoretical research in order to understand the mechanisms through which the interventions work and to be able to understand when one intervention is preferable to another.
In order to increase our understanding further we need, not only theoretical work, but also empirical that tests the theories and apply them to the real world. Therefore, we will accompany our theoretical work with field experiments in different domains aiming at capturing different aspects of behavioral interventions.
Understanding nudges, boosts and other behavioral interventions has important policy implications. If policy makers increasingly rely on such policy tools, it is of utmost importance to understand the mechanisms through which they work since this will provide important knowledge about both the effectiveness and about whether such interventions would be welfare enhancing or not. We hope that our research will increase this understanding.