An Expository on Nudge Theory

Behavioural economics investigates the influences of psychological, cognitive, emotional, cultural, and social aspects on individual or institutional decisions, and how those decisions deviate from those predicted by traditional economic theory. Nudge theory is a concept found in behavioural economics, decision-making, behavioural policy, social psychology, consumer behaviour, and related behavioural sciences. It suggests adaptive designs of the decision environment (choice architecture) as means of influencing the behaviour and decision-making of groups or individuals. Other methods of achieving compliance, such as education, regulation, or enforcement, contrast with nudges. There are numerous nudge units worldwide, national and international (such as the World Bank, the United Nations, and the European Commission). 

Around 1995, James Wilk created the first iteration of the phrase "nudge" and its guiding principles in the field of cybernetics, which Brunel University professor D. J. Stewart referred to as "the art of the nudge." The term "nudge" is used in economics to more broadly apply it to behaviour modification. A nudge modifies the environment in such a manner that automatic cognitive processes are stimulated to favour the desired outcome, increasing the likelihood that a person would make a specific decision or behave in a certain way. A person's actions are not always consistent with their objectives (a discrepancy known as a value-action gap). Humans are known to be imperfectly rational creatures; as a result, even when they are aware that what they are doing is not in their best interests, people frequently act against their own interests.

There are numerous famous instances of nudge theory applications in governance. Both British Prime Minister David Cameron and American President Barack Obama have tried to use the nudge theory during their mandates to accomplish domestic policy objectives in their respective nations. Cass Sunstein, who contributed to the theory's development, was appointed head of the Office of Information and Regulatory Affairs by the United States in 2008. David Halpern, a psychologist, is the leader of the British Behavioural Insights Team, sometimes known as the "Nudge Unit," which was founded at the British Cabinet Office in 2010. In order to combat the coronavirus pandemic in 2020, the British government of Boris Johnson chose to rely on the nudge theory, with the help of Chief Scientific Adviser Patrick Vallance. 

Corporate culture and company management have both benefited from the application of the nudge theory. Top Silicon Valley corporations have been pioneers in the application of nudge theory in corporate settings. To boost employee satisfaction and productivity, these businesses apply nudges in a variety of ways. Recently, more businesses have become interested in utilising "nudge management" to raise the output of their white-collar employees. 

The nudge theory has also recently been applied in a variety of ways to aid healthcare workers in making more thoughtful decisions across a range of domains. For instance, nudging has been used to encourage healthcare professionals to practise better hand cleanliness in order to reduce the incidence of illnesses related to healthcare. 

The effects of nudges, which are utilised at many different levels in AI algorithms, such as recommender systems, are now being studied. The relationship between nudges and AI was the subject of two articles that were published in Minds & Machines in 2018. They described how persuasion and psychometrics can be employed by personalised targeting algorithms to affect individual and group behaviour, sometimes in unforeseen ways. 

An outstanding example of a business using nudges to encourage customers to purchase more goods is Amazon. They accomplish this by offering their customers time-limited deals and free shipping. These discounts typically only last a limited time, enticing customers to purchase their desired goods right away. This is a fantastic approach to encourage consumers to purchase more items from the site. 

While it can assist people in making decisions that are more consistent with their values and long-term aspirations, ethics experts have vigorously contested the nudge idea. The Nudge Theory may be perceived by some as unjust and deceptive. There is no assurance that it will produce favourable results, and it might not be useful in all circumstances. It carries certain hazards because it might be employed to encourage unethical behaviour or influence people to take actions they might come to regret. Despite the value and diversity of behavioural approaches to government, the authors of the 2017 book Neuroliberalism: Behavioural Government in the 21st Century contend that there are serious ethical concerns, including the risk of the neurological sciences being appropriated for the purposes of neo-liberal economics. It has been noted that nudging is also a euphemism for social engineering's use of psychological manipulation.

There is still much to learn about this relatively new field of nudge theory. Studies have nonetheless indicated that it might be advantageous to mankind.