4.1.2.4 Behavioural Economics and Economic Policy

https://www.youtube.com/watch?v=KlhvmKKctqs&list=PLWeicFreBUYDwmBZ0AiJwhCNSCb0di9eI&index=40

What is a choice architecture/nudge policy?

Something that encourages a particular decision or behaviour without removing the freedom of choice

What are all the choice architecture/nudge policies?

Framing

Nudges

Default Choice

Restricted Choice

Mandated Choice

What is framing?

How decision making is influenced by the way in which information is presented to us

What is choice architecture/nudes?

How decision making is influenced by the location or placement of certain things or services

What is defaul choice?

Default choice is an option that has been preselected for an individual unless they opt out of it or choose a different option

e.g. organ donation, salad with burgers, pension enrollment

What is restricted choice?

Where the number of choices made available to an individual is restricted

e.g. public smoking bans, location of takeaways, school dinner choices

What is mandated choice?

A form of choice architecture where the individual must make a decision. Mandated choices are usually required by law.

What are the issues of chouce architecture/nudge policies?

Too paternalisitic? - Is the government going too far in influencing our decision making

Unpredictable and Costly - No guarantee that these policies are going to work at all. No guarantee that consumer reaction will follow what the goverment want. A lot of them have big admistration costs and could lead to government failure

Based on fallacies and biases - Some individuals may not fall for these tricks

Strong enough policies - Can these overcome deeply rooted issues such as addiction, information failure

Evalution points?

Costs vs Benefits and the risk of government failure

Is information provision better?

Shove policies may provide the results that we want to achieve