05_P & B - Chapter 06

We are strongly influenced by what other people do

Norms = Norms are social influences that affect our decisions and choices Can be divided into informational influences and normative influences

• Informational influences: How we learn from others
  -> if humans are in a foreign city and looking for a restauarant -> busy restaurants might be better than empty ones
• Normative influences: How we respond to pressures from the groups around us
  -> when 90% give one answer -> the other 10% have the pressure to give the same even if it is completely wrong

Humans are influenced by what other people do; other people’s behavior is perceived as a norm they comply with. Other people’s behavior functions as a recommendation: if other
people do it, it can’t be a bad idea.

How to nudge:

• Communicate that many people already show the desired behavior
• Communicate that other people approve of the desired behavior

We tend to ‘go with the flow’ of pre-set options

Person is given the choice between different options -> One option is already preselected
e.g. Trinkgeld oder Lieferungsdauer

Preselection often accepted: People view preselection either as a recommendation or as a reference point from which the possible gains or losses are considered

Preselecting one option instead of leaving choices completely open. Option that is in the best interest of the person or of society should be chosen as a default.

Examples:

• Organ donation -> Set up as Opt-In or Opt-Out in different countries
  • Opt-in: amount really low -> need to hange that they would donor their organs
  • Opt-out: amount really high (consequences: some people become a donor against their will)
• Insurance -> if you choosing a insurance there is mostly already one who is pre-selected
• Cookies pre-selection when visiting a website
• Double-sided or back/white printing pre-selection

• Mass defaults:
  Mass defaults apply to all customers of a product or service, without taking
  customers’ individual characteristics or preferences into account
   
• Personalized defaults:
  Personalized defaults reflect individual differences and can be tailored to better
  meet customers’ needs

please see picture attached

examples: 

begin defaults (gutmütige): Amazon choose "Standard Delivery" / monthly payment of health insurance fee -> not anybody has the money to pay the whole amount at once

random defaults: 2 headlines for a magazine -> 4 hours they decide with headline they would take based on the clicks who are made (the more popular one will take over)

hidden option: 
MS Office -> a lot of options are hidden because it can be impossible or confusing if there are all options on the front page. the target is that just the most used options are on the front page 

smart defaults: google.ch -> realise where we are currently and provide us the right serivces for our location

defaults persistent defaults: based on our previous behavior -> last payment option I have used on Zalando will be pre-selected

adaptive defaults: suggestions based on frequency of our choices -> if I begin to type in an email address -> pre-select an email address that i have used in the past the most

Our attention is drawn to what is novel and seems relevant for us.

• People are bombarded with stimuli
• Consequently, people tend to unconsciously filter out much information as a coping strategy
• Attention is only drawn to what is novel and seems relevant to the person
• Thus, behavior is strongly influenced by what attracts the attention

How to nudge:

Make the information salient to influence decision-making -> People are more likely to register stimuli that are...:
… novel (messages in flashing lights)
… accessible (items on sale next to checkouts)
… simple (a snappy slogan)
- > Apply these attributes to your communication

Examples:

• Tax paid as part of the retail price (USA):
  Turnover reduced by 8% when tax is stated on the price tag instead of just being added when paying at the checkout

Our actions are often influenced by sub-conscious clues

• Our behaviors are often influenced by sub-conscious cues (words, sounds, smells etc.)
• Priming System 1 -> use the cues exactly when people make a decision to prime them into a certain direction
• Influenced by words, pictures, smells, sounds (e.g., music)

Nudging: Use cues deliberately to influence decision-making
 

Example: Music played in a store influences choice of wine

Our emotional associations can powerfully shape our action

Our emotional associations influence our decisions and hence powerfully shape our actions

Nudging: Induce emotions to influence decision-making (e.g. fear -> bicycle helmet)

es: (Choice of a brand is influenced by repeatedly linking it with positive of negative words and pictures)

• Cocal Cola (happiness, love, good feeling)
•  

We seek to be consistent with our public promises, and reciprocate acts

Nudging: 

• Ensure you get a (public) commitment from the person
• Give something to get something back
• Stakes (wetteinsatz) - no charity or something like that -> this can an be excuse 

Examples:

• WeightWatchers -> same goals
• Reciprocity: free tee from a shop owner in marrakesch-> giving nothing in return can be very uncomportabe and rude -> people buying things after the tee 

We act in ways that make us feel better about ourselves

Nudging: Use arguments that address the need to feel good about oneself, that improve the sense of self-worth and create a positive image of oneself

Example:

• a beautiful girl shows with her finger the small penis and the text "speeding is not cool - no one things big of you" should reduce the speed of the drivers based on their ego 

it is both possible and legitimate for private and public institutions to affect
behavior while also respecting freedom of choice. Often people’s preferences are illformed
[…]. In these circumstances, a form of paternalism cannot be avoided.
Equipped with an understanding of behavioral findings of bounded rationality and
bounded self-control, libertarian paternalists should attempt to steer people’s choices
in welfare-promoting directions without eliminating freedom of choice

Paternalism: 
People in authority are restricting the freedom and responsibilities of those subordinate to them in their supposed interest (e.g., health insurance, using a seatbelt, wearing a helmet on a motorbike)

• Policies should support people in making the choices that are in their own best interest
• Tools of choice architecture are used to achieve this
• The freedom of choice remains (libertarian)

Example:

• Libertarian paternalism: Einzahlung der dritten Säule -> freiwillig (libertarian)
• Parternalism: Anschnallpflicht im Auto

Nudges […] are called for because of flaws in individual decision-making, and they work by making use of those flaws.

please remember:

-> Humans frequently decide irrationally and not in their best interest

• Humans struggle to assess risks correctly
• Humans struggle to forgo short-term utility in favor of long-term utility
• Humans avoid complex decisions and stick to the status quo

• It is applied in Swiss Government but it is not called "choice architecture" -> e.g. BAG strategy to support a healtyh lifestlye
• Because of the discussions in the media about the manipulation of nudging the government is very careful and restrained
• Also appied in Switzerland, e.g. by the Energy Research of the city of Zurich
• UK and US have both "Behavioral Science Insights" teams 

there is no neutral decision-making design – you cannot not influence decisions

Which means: «If there is no such thing as a neutral design, then we are always being
nudged.»

Nudging:
Intentional influence on decisions, aiming at improving decision-making in people’s best interest and/or to achieve some benefit for the decision designer

Unintentional influence is not nudging

• System 1 & 2 see picture attached

please see picture attached

differentiation between transparent and non-transparent nudges (see picture attached)

trasparent / system 1 (automatic thinking):
Transparent influence of behavior (technical manipulation)
The nudge is transparent, i.e. it allows the influenced person to recognize/notice the means used to influence him/her (without engaging the reflective system).

Examples:
Using color red to draw attention, changing printer defaults from one-sided to double-sided printing

non-transparent / system 1 (automatic thinking):
Non-transparent manipulation of behavior Trigger changes automatic behavior, but doesn’t give away the intention behind the nudge.

Examples:
reducing plate size, changing order of food at buffets.

trasparent / system 2 ( reflective thinking):
Transparent facilitation of consistent choice
Engages the reflective system and prompts decisionmaking in ways that are transparent for the person.

Examples:
Fuel economy information label, prompted choice for organ-donation.

non-transparent / system 2 ( reflective thinking):
Manipulation of choice
Nudge engages reflective system but not in a way that makes the intentions and means apparent to the decision-maker.

Example:
posting faces to increase compliance rates with norms such as cleaning up after oneself or paying for coffee.

Please see picture attached

Please see the picture

Choice architecture uses tools to influence decision making. These tools are sometimes called nudges.

• Nudges are ways of influencing choice without limiting the choice set or making alternatives appreciably more costly in terms of time, trouble, social sanctions, and so forth. They are called for because of flaws in individual decision-making, and they work by making use of those flaws.
• A nudge is any attempt at influencing behavior in a predictable way
  without forbidding any previously available courses of actions or making
  alternatives appreciably more costly in terms of time, trouble, social
  sanctions, and so forth.

There is no neutral decision-making environment: you cannot not influence -> 

One is not forced to make a decision a certain way or to display a certain behavior but
by designing the decision-making environment, a nudge is given into a specific
direction

Is applied in all areas of life where decisions are made:
Conscious application of the principles of choice architecture in product design, marketing and politics (e.g. placement of stairs and elevator at FHNW in Olten)

on mistakes/bugs in the decison making process -> Humans frequently decide irrationally and not in their best interest:

• Humans struggle to judge risk correctly
  -> e.g. Overestimate risks (e.g. buying insurance that is not really useful)
  -> we protect us not against risks we should (vaccination against covid) 

• Humans struggle to pass on short-term utility for long-term utility -> Saving or not saving money / invest money that it multiple 

• Humans avoid complex decisions and stick to status quo -> they cannot decide -> e.g. saving plan for retirement

-> Choice architecture can help us to find the best choice for ourselfes

• Designing the decision-making environment -> this can leads to a certain desicion
• Choice architecture can help us to find the best choice for ourselfes
• CA influencing the choice without limiting the choice set, making alternatives negatively change the alternatives in terms of time, trouble, social
  sanctions
• Is applied in all areas of life where decisions are made
• There is no neutral decision-making environment: you cannot not influence (the way food is presented in a restaurant on a self-service buffet)

see picture

Decisions are influenced more effectively if both system 1 and system 2 are addressed, thus appealing to emotions and intuition as well as using facts and arguments

-> This insight should be utilized when applying Choice Architecture

see picture attached

Both...

• are based on the principles of choice architecture
• Offer a number of tools/approaches to influence decisions and behavior
• Do not contradict each other but use a different level of details and different terms when describing how choice architecture can be applied systematically

-> Humans struggle to forgo short-term utility in favor of long-term utility

• Behavior that is beneficial for the future should be rewarded in the present
• By providing incentives, humans can be motivated to make more positive decisions for their future

Examples:

• Tax relief in the present as an incentive for a payment into Säule 3a
• rewards fom the insurance if you archieve a number of steps (via app) -> healthier lifestyle, who helps to stay longer helathy
• Incentives (in the form of discounts, free delivery etc.) are often used to influence
  consumer decisions and thus increase sales (Lieferung ab 200.- gratis)

Humans are often not aware of the implications of their decisions and can hence not consider those implications in their decisionmaking process

Relevant implications of all available options should be conveyed in an easy-to-understand manner, ideally by directly connecting the decision with its resulting implications (especially when decisions have long-term consequences that are difficult to grasp)

Examples: 

• buying a digital camera: 
  Commonly the technical specifications of a camera are communicated, e.g. number of megapixels
  Relevant implications that should be communicated: Up to which size can I print a picture taken by this camera? How many pictures can I save on my memory card? -> not just the megapixel
• Saving for retirement:
  Future consequences of financial decisions in the present are not always
  very obvious to people –> hence limited motivation to save money today to have a better life in the future. -> People can be motivated to save more if they are made aware what decisions in the present mean for their future self e.g. trough visualizing the housing situation in old age depending on the saving rate and the resulting pension

Person is given the choice between different options -> One option is already preselected
e.g. Trinkgeld oder Lieferungsdauer

Preselection often accepted: People view preselection either as a recommendation or as a reference point from which the possible gains or losses are considered

Preselecting one option instead of leaving choices completely open. Option that is in the best interest of the person or of society should be chosen as a default.

Examples:

• Organ donation -> Set up as Opt-In or Opt-Out in different countries
  • Opt-in: amount really low -> need to hange that they would donor their organs
  • Opt-out: amount really high (consequences: some people become a donor against their will)
• Insurance -> if you choosing a insurance there is mostly already one who is pre-selected
• Cookies pre-selection when visiting a website
• Double-sided or back/white printing pre-selection

• Mass defaults:
  Mass defaults apply to all customers of a product or service, without taking
  customers’ individual characteristics or preferences into account
   
• Personalized defaults:
  Personalized defaults reflect individual differences and can be tailored to better
  meet customers’ needs

please see picture attached

examples: 

begin defaults (gutmütige): Amazon choose "Standard Delivery" / monthly payment of health insurance fee -> not anybody has the money to pay the whole amount at once

random defaults: 2 headlines for a magazine -> 4 hours they decide with headline they would take based on the clicks who are made (the more popular one will take over)

hidden option: 
MS Office -> a lot of options are hidden because it can be impossible or confusing if there are all options on the front page. the target is that just the most used options are on the front page 

smart defaults: google.ch -> realise where we are currently and provide us the right serivces for our location

defaults persistent defaults: based on our previous behavior -> last payment option I have used on Zalando will be pre-selected

adaptive defaults: suggestions based on frequency of our choices -> if I begin to type in an email address -> pre-select an email address that i have used in the past the most

1. Self-control:
   Difficult to resist temptations, spending money on nonessentials
    
2. Procrastination:
   Delaying unpleasant tasks such as dealing with personal finances
    
3. Status quo bias:
   Maintaining the current situation, i.e. not changing the saving rate even though
   one could due to the pay rise
    
4. Loss aversion:
   Savings are perceived as losses because they reduce the net pay
    
5. Hyperbolic Discounting:
   Immediate utility of money outweighs later utility of the money -> For the future, this perception does not apply: We can imagine saving more money in the future -> Once we have reached this point in the future however, it is NOW – and hence we struggle to save: Immediate utility of money outweighs later utility of the money

People need feedback to become aware of their behavior and the implications of their behavior; this is especially true if the behavior and the decision have implications for the long-term future. Feedback needs to be timely/direct for people to consider the longterm implications of their decisions.

Provide timely feedback to make people aware of the short-term and long-term implications of their behavior. In doing so, people are more likely to consider the consequences of their decisions and hence are supported in changing their present behavior towards better results for their future.

Examples:

• Displaying fuel consumption in real time:
  Influencing driving behavior via direct feedback on the fuel consumption; Adapting behavior accordingly is more likely than just getting feedback when refilling the tank at some point later
• Displaying water consumption:
  while showering we can see the water consuption due to a display and reduce it
• Saving plan:
  Direct feedback on how changing the saving rate (present behavior) will influence the overall amount saved (longterm consequence)

People make errors; some errors are typical: they happen repeatedly to many people and can hence be anticipated

The environment should be designed to help people avoid errors or make them aware of their errors in order to enable them to correct those errors

Example (based on expected errors):

• Outlook subject line:
  Outlook asks if you really want to send the email without a subject line
• Recycling bins:
  deisgning the bins in a certain way -> shape of the head and the colour can help

mistake made during a routine procedure, often not due to limited knowledge or limited motivation to avoid the error)

Example -> Post-completion error (PCE): 

-> Printer / Gas stations (special reminders)

• Is a procedural error: After performing a ‘task critical’ step, a PCE can occur if an individual forgets to perform a required ‘related step’ before starting a new task
• In other words: error that happens when some action is required to be performed after the main goal of the task has been satisfied or completed
• PCE is particularly likely when the load on the working memory is high
• PCE is particularly likely when the critical task is challenging
• Motivation to reduce the occurrence of errors does not affect the likelihood of making an error
• Error occurs even when people have the knowledge required to
  perform the task correctly (and even if they know of this error)

The more complex a situation is, the more difficult it is to make a decision. Hence, people often accept the status quo even though it might not be the best. Reducing the complexity in the choice situation: presenting options so that they are easy to understand and hence making a change in the status quo is more likely.

Examples:

• Zalando:
  Online shops offer detailed search functions to make it easy to find suitable products
• Mobile phone provider:
  individual digital offer based on some information based on your needs

Please see picture attached