Nudging: Overview, methods and examples

What is Nudging?

Nudging is a behavioral intervention (i.e., an intervention in people’s behavior) that is used to steer decisions in a certain direction without restricting the individual’s freedom of choice. The term was first introduced by behavioral economists Richard Thaler and Cass Sunstein in their 2008 book,“Nudge: How to Instigate Smart Decisions.”

The basic idea of nudging is to encourage people to change their behavior by subtly adjusting the way options are presented. Instead of strict regulations or financial incentives, human behavior is “nudged” or “nudged” to make better decisions.

In this context, the two Nobel laureates have coined the term so-called libertarian paternalism. This means that nudges aim to help people make better decisions than they would on their own (paternalism) without imposing anything on anyone (libertarian).

Nudging from the perspective of behavioral research

Richard Thaler and Cass Sunstein have described various behavioral tendencies found in humans. These elements are at the heart of nudge theory and are found in many nudges.

Inertia, procrastination and present tendency
People tend to stick with a behavior or product even when the cost of change is low and the benefits are high. This is called the status quo effect. The more complex the decision, the greater the effect.
Procrastination is the name given to the procrastination of decisions or behavioral changes. This creates a focus on the present (present bias) and people do not include long-term costs, for example, or include them too little in the decision.

Framing, salience, and loss aversion
The decision situation has an enormous influence on the decision itself. For example, it makes a big difference to the decision whether profits are realized (profit frame) or losses are avoided (loss frame) as a result of the decision. Possible losses are weighted much higher by people than possible gains. Simplicity in the presentation of information also leads to faster decisions; complexity reduces the speed of decision-making. A reference point (anchor) such as the first-mentioned price in negotiations plays an important role in the subsequent decision.

Social influences and norms
People consider other people’s behaviors when making decisions. Concern for one’s reputation is closely linked to social norms.

Misestimation of probabilities
In general, people find it difficult to assess probabilities, especially when strong emotions play a role. Many people have developed their own “rules of thumb” to assess risks, for example. For example, the probability of an event occurring is estimated to be significantly higher if it has already happened recently.

The 10 most effective nudges

Of course, the list is not perfect and the choice of the nudge depends strongly on the situation and the task. However, we have found the following nudges in many places and they have been proven to work successfully in practice:

• Default options: In many cases, people tend to choose the default options. Example: The saving of printer paper by the default setting “print double-sided
• Simplification: The desired options should always be easily available and well understood. This applies to websites, product descriptions or even presentations of new ideas
• Social norms: People often base their behavior on that of others. For example, if you as a manager show examples of colleagues who have implemented innovative ideas and publicly celebrate the successes, this will positively influence behavior.
• Convenience: people tend to use the easiest way. Thus, the desired option should always be the most easily accessible when selecting a product
• Loss aversion: People fear losses more than they value gains. Highlight the potential loss from not choosing a decision, rather than just emphasizing the benefits.
• Reciprocity: people tend to return kindness or generosity. Offer employees support and resources for their innovative ideas and they are likely to respond with engagement and creativity.
• Setting anchors: The first information we receive often serves as an anchor for later decisions. Set high expectations and goals for innovation at the beginning of projects to raise employee ambition.
• Ego effect: people tend to adopt behaviors that are positively associated with their identity. Link the concept of innovation to the company identity and the individual role of each employee.
• Commitment and consistency: People want to be consistent in their behavior, especially when they have made a public commitment to do so. Ask employees to openly express their intention to work on innovative projects.
• Self-commitment: People achieve goals better when they make their self-imposed goals public. This creates a kind of self-binding.

Examples of nudging in companies

Here are some examples of nudging in business. Some nudges should work exactly the same way in many organizations, while others need to be adapted to each company’s culture.

• Recycling: companies make recycling stations more visible and accessible to encourage recycling behavior. Additionally, clear and attractive labeling or color codes can help simplify waste separation for employees.
• Healthy behaviors: Companies place healthier options in the company cafeteria more prominently or offer them at lower prices to encourage healthier eating among employees.
• Safety: In industrial environments, companies use visual anchors such as colored lines or signs to highlight safety zones and prevent accidents.
• Efficient use of resources: Companies set up automatic energy-saving modes as the default (“default optioN”) on computers and other devices to reduce energy consumption.
• Participation in employee programs: If participation in desired programs is low, opt-in can be defined as the default. Employees must therefore actively “opt-out” if they do not wish to be included. In some cases, this increases participation in further training, health programs or pension plans many times over.
• Use of digital tools: Companies are adopting new digital tools or platforms as a standard option.
• Punctuality: One of my favorite nudges: set the start time of meetings to a rather unusual time like 11:03 instead of 11:00, this improves the punctuality of many participants significantly, as they have time to join from previous meetings.

Ethical concerns

For Thaler and Sunstein, an important concern was that nudging not be used to make people unconsciously behave in ways that harm them. Therefore, Nobel laureates have developed and based the use of nuding on the following principles:

• All incentives should be transparent and never misleading
• It should be as easy as possible to decide against the suggestion
• There must be good reasons to believe that the behavior being promoted will improve the welfare of those being promoted

Nudging through artificial intelligence (AI)

The combination of nudging and artificial intelligence (AI) offers exciting opportunities to improve user experiences, promote healthy and sustainable behaviors, and increase productivity in organizations. Here are some examples of how nudging and AI can be used together:

• Personalized nudging: By learning individual preferences and behaviors, AI can deliver personalized nudges that are more effective than generic ones. For example, fitness apps could track users’ exercise habits and send personalized reminders and motivational boosts to encourage them to work out.
• Predictive nudging: AI can analyze large amounts of data to identify patterns and make predictions. These insights can be used to deliver nudges based on future behavior. For example, energy companies could use AI to analyze a household’s energy use and send nudges encouraging energy use at times of lower demand.
• Adaptive learning systems: AI-based enterprise learning platforms can use nudging principles to improve the user experience. For example, they could include reminders or incentives that encourage users to study regularly or tackle difficult topics.
• Health management: AI-driven health apps can use nudging techniques to encourage healthy behaviors. For example, they could encourage users to drink more water, engage in regular physical activity, or make healthier food choices. This information could be displayed on the employee’s screen or on the
• Sustainable behavior: AI can help promote sustainable behavior. For example, smart thermostats could learn when employees are in the office and adjust heating or cooling accordingly to save energy.

Please also keep in mind ethical considerations when using AI in nudging, especially with regard to privacy and autonomy. Techniques should be used in a way that respects privacy and does not force people to adopt certain behaviors, but allows them to choose. You can also let ChatGPT generate ideas for nudging in specific situations during the innovation process. In the article on Design Thinking with ChatGPT – Uses and Prompt Examples you can find some thoughts on this.

Nudging for more innovation culture

Innovation culture in organizations can be positively influenced by nudges. Here are some real-world examples that we have used in customer projects at the verrocchio Institute. Behind each I have noted the underlying nudging principle:

• “Celebrate mistakes”
  Employees present their mistakes and the learnings in cross-team meetings.
  Nudging principle: social norms / learning from mistakes
• Innovation labs or collaboration spaces
  By setting up dedicated spaces for innovation projects, an environment is created that promotes teamwork and the exchange of ideas.
  Nudging principle: salience / physical environment
• “20 percent time”
  Employees are encouraged to spend some of their work time on creative projects. Google, for example, has introduced this in its well-known “20 Percent Time” program.
  Nudging principle: default settings / autonomy
• Introduce a reward system for innovative ideas or projects, such as an “Innovator of the Month” award.
  Nudding Principle: Positive Reinforcement / Incentives
• Establish an open-door policy that makes it easier for employees to share ideas directly with managers.
  Nudging principle: facilitating choice / accessibility
• Use of a digital platform on which employees can submit and evaluate ideas .
  Nudging principle: accessibility
• Introduce cross-departmental meetings or rotations to foster understanding and appreciation of different perspectives and expertise across the organization.
  Nudging principle: diversity / change of perspective

Nudging in product development

Particularly in the case of products that are intended to bring about a change in behavior, it makes sense to integrate the idea of nudging directly into product development, e.g. with the question: What must the properties of the product be so that access to them is as easy as possible?

Design Thinking and Nudging

Especially the empathy phase in design thinking results in many opportunities to find out which nudges might work for customers. For example, Amazon’s customer observations found that many customers abandoned the checkout process because they found it too lengthy and cumbersome. In response, the company has introduced 1-Click ordering, which significantly simplifies the purchasing process. The principle of nudging that comes into play here is “simplification” and “reduction of friction.” By reducing the buying process to a single click, Amazon has eliminated hurdles and friction points that had previously kept customers from completing a purchase.

Nudging in digital product development

Nudging principles have long been part of digital product development, especially when it comes to UI/UX design. Here are a few examples from our digital project work on how nudging principles can make digital products more successful. You can also find more ideas in our large Digital Transformation handbook.

• Default settings: Set as default the selection of “opt-out” options instead of “opt-in” options for services such as newsletter delivery or consent to data collection.
• Salience/Highlighting: Special features or options are highlighted to draw users’ attention to them. For example, the “Buy” or “Continue” button on a website could be highlighted in color or made larger to encourage users to click.
• Simplification: The user should be able to easily see which path to take to complete a task. An example of this is eliminating unnecessary steps or providing autocomplete options in forms.
• Social evidence and ratings: Other people’s opinions strongly influence our decisions. By displaying reviews, testimonials, or the number of people who have purchased a product or read an article, user behavior can be influenced.
• Incentives and gamification: providing rewards or introducing gamified elements can encourage people to perform certain actions. For example, users could earn points or badges for completing their profile, sharing content, or taking surveys.
• Reminders and prompts: Users can be encouraged to perform certain actions or continue completed tasks through reminders or prompts. This could take the form of notifications, pop-ups or email reminders, for example.
• Framing: the way options are presented can have a big impact on user decisions. For example, paid subscriptions could be presented as “less than 1 euro per day” instead of “29.99 euros per month”.

Green Nudges – Drivers of Sustainable Behavior

One example is the placement of a trash can in a park. The effort for a visitor to walk there and throw the Coke can into the trash can, for example, is significantly more time-consuming than simply dropping it on the ground. Nudges such as stickers with footprints (default option) lead to a significant increase in the amount of trash thrown there.

Here, too, much can be achieved with gamification. A great example is “The World’s deepest bin” in a nudging campaign by Volkswagen. This nudge led, for example, to children running and deliberately looking for trash in the park to repeat the experience of throwing it in. Watch the video about it here.