Defaults default what happens when you dont do

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Defaults Default: what happens when you don’t do anything? Defaults are unavoidable. All decisions must offer a default. Choice architects must decide what the default is (i.e. what happens when people do not choose anything). Why Defaults work Mechanical Reasons Belief-Based Reasons Psychological Reasons Transaction costs Decision costs Forgetting Unawareness Recommendation (this is what policy makers are recommending) Social Norm (that’s what everyone does) Prescriptive Norm (that’s the right decision) Risk aversion (leads to inaction) Regret (more potential regret from an action than an inaction) Lack of reasons for making an active choice Procrastination
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Defaults can exert powerful effects even if changing the default (or opting out) is easy. Lecture 19 Behavior Changes Make desired behaviors easy, and undesired behaviors difficult. Not all behaviors are nudge-able. Big Behavior Influencers 1. Environmental Norms 2. Other People 3. Obvious Situational Factors (e.g., Time) Environmental Norms *order vs. disorder behavior (littering in a messy area etc.) *the size of a bucket of popcorn Other People Diffusion of responsibility: Someone else will help, so I don’t have to. Other people often signal what to do and what is appropriate. Obvious Situations People don’t do things that don’t occur to them. People are more likely to eat food when it is visible (in a clear candy dish) than when it is not (in an opaque candy dish). People are more likely to interact with others who are nearby. People don’t do things they don’t have time for. Lecture 20 Morality of pushing a man in front of a train to save 5 vs. throwing a switch to kill 1 man to save 5 Five Moral Foundations 1. Harm 2. Fairness a. reciprocity b. equality c. exploitation 3. Ingroup Loyalty 4. Respect for Authority
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5. Purity Fairness Customers and employees are entitled to the terms of the reference transaction. Firms are entitled to their reference profit. Purity People dislike “repugnant transactions” (short selling, life insurance, cat. bonds) Morality as a Market Constraint People have moral intuitions These intuitions limit the market transactions they find acceptable Unfairness/exploitation Disgustingness Benefits from harm Lecture 21 Planning Correlations between intentions and behavior are relatively weak, due largely to people having good intentions but failing to act on them. *giving specific directions (i.e. specific location on map, plan specific route to get there) helps increase follow-through Feedback *getting feedback on energy bills = lower bills (also ambient orb) *step counters *MPG gauge on cars Pay What You Want Radiohead Experiment – probably a fluke due to insane following Pay what you want + 50% charity = more effective per person revenue ALL CALSS TAKEAWAYS 1. Ask: “How do you know that?” and “Why do we do things that way?” 2. Whenever Possible: EXPERIMENT (Or gather data) 3. When evidence suggests that you should change your policies: CHANGE YOUR POLICIES
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